Global Banks Raise South Korea's 2026 Inflation Forecast to 2.0% Amid Weak Won

Your cost of living could be heading up. Citing the continued weakness of the local currency, major financial institutions have raised their 2026 inflation forecasts for South Korea, signaling growing concerns that a depreciating won will fuel price pressures across the economy.

Forecasts Nudge Upward

According to data compiled by Bloomberg from 37 institutions, including major investment banks, the median projection for the country's consumer inflation for next year now stands at 2.0%. This marks a 0.1 percentage point increase from 1.9% at the end of last month. During this period, 14 institutions revised their forecasts up, while only three lowered them.

The Bank of Korea (BOK) itself raised its outlook last month, lifting its forecast for next year to 2.1% from 1.9%. The central bank also warned that consumer inflation could accelerate to the mid-2 percent range if the domestic currency remains weak.

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Weak Won Nears 1,500 Mark

The primary driver behind these revisions is the Korean won's slump. The currency has been hovering near its yearly low, approaching the 1,500 won per U.S. dollar level this week. It had already slipped below the psychologically important 1,450 won level in November. A weaker won makes imports, such as oil and raw materials, more expensive, directly feeding into higher domestic inflation.

However, on Wednesday, the won posted its sharpest daily rise against the dollar in more than three years following strong verbal intervention by foreign exchange authorities. This move indicates the government's heightened concern over the currency's rapid depreciation.