Korea's inflation edges up to 2.1 percent in March

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Korea's inflation edges up to 2.1 percent in March

Published: 02 Apr. 2025, 17:32 Updated: 02 Apr. 2025, 19:30

SHIN HA-NEE
[email protected]

Audio report: written by reporters, read by AI

Shoppers inspect instant coffee mixes at a discount mart in southern Seoul on April 2. [YONHAP]

Korea’s headline inflation edged up in March, remaining in line with its central bank's expectations, as the prices of both food and college tuition continued to rise.

Consumer prices rose 2.1 percent in March from the same month a year ago, according to data Statistics Korea released Wednesday, a slight lift from February's 2 percent. March marked the third month in a row the annual increase has remained in the range of the Bank of Korea's (BOK) 2 percent target.

Core inflation, which excludes volatile food and energy prices, also accelerated to 1.9 percent from 1.8 percent in February.

While annual inflation has remained largely stable since the beginning of 2025, the worst wildfire in the country’s history last month and persistent foreign exchange uncertainty could add upward pressure in the second quarter. The BOK, nevertheless, expects inflation to hold steady in the near future, with slow demand offsetting such inflationary pressure.

“Inflation staying in the 2 percent range for the third consecutive month is largely due to the rising prices of processed food products and private services,” said Lee Doo-won, deputy director-general for short-term economic statistics at Statistics Korea, during a press briefing on Wednesday. “While fuel prices had a greater impact in January and February, the March reading appears to be marked by the public service price increases driven by higher tuitions.”

Lee Doo-won, deputy director-general for short-term economic statistics at Statistics Korea, speaks during a press briefing at the government complex in Sejong on April 2. [YONHAP]

Goods saw a 1.7 percent on year increase in prices, responsible for 0.8 percentage points of the overall growth.

Although the annual fuel price increase notably moderated from the previous month’s 6.3 percent to 2.8 percent in March, manufactured goods continued to boost inflation as a series of price hikes implemented by food companies drove up processed food prices by 3.6 percent from the previous year. The annual increase in processed food prices has been accelerating since the beginning of the year, from January’s 2.7 percent increase to February’s 2.9 percent rise.

Inflation was relatively steeper in the service sector at 2.3 percent, responsible for 1.3 percentage points.

The growth was mainly driven by universities hiking tuition fees, as private college tuitions rose 5.2 percent on year in March.

Private services also became more expensive in general, with the cost of eating out rising 3 percent on year.

The cost of living index, which tracks changes in the prices of 144 frequently purchased consumer goods and services, rose 2.4 percent, a deceleration from the previous month’s 2.6 percent.

The government plans to survey the effects of last month's wildfires on agricultural and livestock production in the southeastern region of Korea and assess its potential impacts on the country's fresh food supply, the Ministry of Economy and Finance said in a release on Wednesday.'

“Given the cultivated acreage, there can be potential impact on apples, cabbages, garlics, and beef production,” Lee said.

“Considering that uncertainty surrounding foreign exchange rates, fuel prices and domestic demand remain significant, we need to closely monitor the inflation situation,” BOK Deputy Gov. Kim Woong said during an inflation-monitoring meeting the same day.

BY SHIN HA-NEE [[email protected]]