South Korea 2025 Inflation Rate Hits 5-Year Low at 2.1%
South Korea's annual inflation rate dropped to a 5-year low of 2.1% in 2025. Explore the drivers behind this shift and why the weak Korean won still poses a risk.
The fever has finally broken. South Korea's 2025 annual inflation rate settled at 2.1%, marking the lowest level since the pandemic-era lows of 2020. Data from the Ministry of Data and Statistics suggests that the economy is successfully cooling after years of aggressive price growth.
Breaking Down the South Korea 2025 Inflation Rate 2.1%
While the annual figure is a victory for policymakers, December's data serves as a reminder that the path to stability is rarely a straight line. Consumer prices rose 2.3% in December, exceeding the Bank of Korea's target for the fourth month in a row. The main culprit? Petroleum products, which jumped 6.1% year-on-year. Diesel prices led the surge with a 10.8% increase, while gasoline climbed 5.7%.
The weak Korean won remains a critical risk factor. As one of the world's weakest major currencies this year, it's driving up the cost of essential energy imports regardless of global demand.
Inflationary Journey: 2021-2025
| Year | Inflation Rate (%) | Context |
|---|---|---|
| 2021 | 2.5% | Post-pandemic rebound |
| 2022 | 5.1% | Decade-high surge |
| 2023 | 3.6% | Initial moderation |
| 2024 | 2.3% | Approaching target |
| 2025 | 2.1% | 5-year low reached |
Outside of energy, food prices also pressured households. Agricultural, livestock, and fishery products rose 4.1%, contributing 0.32 percentage points to the overall index. Meanwhile, core inflation—which strips out volatile food and energy—stood at 2.3% in December.
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