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Korea's inflation eases with agricultural prices finally stable

Published: 06 Mar. 2025, 08:38 Updated: 06 Mar. 2025, 18:18

SHIN HA-NEE
[email protected]

Customers shop for groceries at a discount mart in Seoul on March 6. [YONHAP]

Korea’s headline inflation eased in February on lower agricultural prices and a moderation in fuel price growth.

The consumer price index (CPI) rose 2 percent last month from a year ago, according to data Statistics Korea released Thursday. The figure marked a deceleration from January's 2.2 percent rise.

Korea’s yearly inflation was largely moderate throughout the latter half of 2024, having remained below the central bank's target range of 2 percent since September, when consumer prices rose 1.6 percent on year, followed by yearly increases of 1.3 percent in October, 1.5 percent in November and 1.9 percent in December.

However, inflation accelerated above the 2 percent threshold in January, fueled by increases in global oil prices and the weak currency.

February's yearly CPI increase was led by manufactured goods and private services, although the inflation eased compared to the previous month.

The prices of manufactured goods rose 2 percent on year, responsible for 0.7 percentage points of the 2 percent CPI growth. Petroleum product prices, in particular, increased 6.3 percent last month from a year ago after jumping 7.3 percent in January.

“Global crude oil prices did not change much compared to the same period last year, in February, but the higher won-dollar exchange rate and lowered fuel tax cut rates appear to have had an impact,” noted Lee Doo-won, deputy director-general for short-term economic statistics at Statistics Korea during a press briefing on Thursday.

The prices of agricultural, marine and livestock products rose 1 percent from the previous year compared to January’s 1.9 percent jump.

Meanwhile, the fresh food price index — consisting of 55 food items with high price volatility depending on seasonal and weather conditions — decreased 1.4 percent from a year ago, marking its first yearly downturn since March 2022.

Private service prices increased 3 percent on year, responsible for 1 percentage point of inflation. The growth was slower than the previous month’s 3.2 percent, with tourism demand falling from the previous month.

On a monthly basis, CPI increased 0.3 percent from January after the previous month’s 0.7 percent growth.

Core inflation, which excludes volatile food and energy prices, registered at 1.8 percent for the month — a slight deceleration from the previous month’s 1.9 percent.

The cost of living index, which tracks changes in the prices of 144 frequently purchased consumer goods and services, rose 2.6 percent, following January’s 2.5 percent.

The central bank said it expects headline inflation to remain around the 2 percent in the near future, citing tariff conflicts, geopolitical tensions, foreign exchange situation and domestic demand as key variables. “The CPI increase is expected to stay on its projected trajectory at around the target level amid the mixed impact of upward pressure from foreign exchange rates and downward pressure from weak demand,” noted Bank of Korea Deputy Gov. Kim Woong during an inflation monitoring meeting on Thursday.

“Given that uncertainties involving the foreign exchange situation and weather conditions persist, the government will remain committed to stabilizing consumer prices,” the Ministry of Economy and Finance said Thursday.

Updated, March 6: Added information of Statistics Korea inflation data by segment, comments from the Bank of Korea and the Ministry of Economy and Finance

BY SHIN HA-NEE [[email protected]]