SEOUL, South Korea — South Korea inflation cooled in December, with consumer prices up 2.3% from a year earlier and 2025 averaging 2.1%, bringing the country within striking distance of the Bank of Korea’s 2% goal. The figures suggest price pressures are easing even as everyday categories such as food and transport continue to rise faster than the overall index, Dec. 31, 2025.
South Korea inflation nears the 2% line
Government statisticians reported the consumer price index rose 0.3% from November and 2.3% from December 2024 in the Consumer Price Index release for December 2025. For the full year, inflation averaged 2.1%, down from 2.3% in 2024, as detailed in a Reuters report that compared the data with economists’ forecasts.
December headline CPI: +2.3% year over year
December CPI change: +0.3% month over month
2025 average inflation: +2.1% year over year
Core measure (excluding food and energy): +2.0% year over year
What’s driving South Korea inflation now
The official release shows the headline rate dipped to 1.7% in August before moving back into the 2% range from September through December. In December, food and non-alcoholic beverages were up 3.6% from a year earlier, transport rose 3.2%, and restaurants and hotels increased 3.0% — a mix that can keep household inflation expectations elevated even when the broader picture is improving.
Core inflation is sending a calmer signal. The Bank of Korea defines its target as 2% CPI inflation over the medium term under its inflation-targeting framework, and the December core gauge excluding food and energy rose 2.0% from a year earlier, matching the target.
Why this matters for interest rates
As South Korea inflation hovers near 2%, the central bank has more scope to focus on growth and financial-stability risks — including currency volatility and housing-market pressures — rather than fighting broad-based price spikes. The Bank of Korea left its base rate unchanged at 2.50% at its Nov. 27 monetary policy decision, saying it would assess domestic and external conditions before shifting policy.
Context: from surge to stabilization
The latest print extends a longer cooling trend from the post-pandemic surge. In mid-2022, the consumer price index was running at 6% year over year, Reuters reported when inflation hit a near 24-year high, prompting aggressive tightening across major central banks.
By late 2024, inflation had slipped below the central bank’s goal — December 2024 was 1.9% year over year — before firming again as the won weakened and import costs rose, another Reuters report noted. With the 2025 average at 2.1%, South Korea inflation is now close enough to target that swings in energy, food and the exchange rate could be the main drivers of short-term moves.
Whether South Korea inflation can settle sustainably at or below 2% will depend on how quickly import-driven costs fade and how firmly domestic demand holds in 2026.
