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South Korea Inflation Stays Hot: Interest Rates on Hold
2 Dec, 2025
Summary
- Consumer prices in South Korea rose 2.4% in November year-on-year.
- Higher food and services costs are driving persistent inflation.
- Bank of Korea is expected to maintain current interest rates.
South Korea is grappling with persistent inflation, as consumer prices climbed 2.4% in November compared to the previous year. This rise has kept inflation above the Bank of Korea's (BOK) 2% target for three consecutive months. The primary drivers identified are significant increases in the costs of food and essential services.
Prices for agricultural and fishery products alone jumped 5.6% year-on-year, with fresh produce like rice and mandarins experiencing substantial hikes. Finance Minister Koo Yun-cheol attributed these elevated prices to a combination of factors, including unfavorable weather conditions like frequent rain and the depreciating won, which also impacts petroleum product costs.
In light of these inflationary pressures and a weakening currency, the BOK opted to maintain its benchmark interest rate at 2.50% for the fourth consecutive meeting. Analysts now anticipate only one more rate cut in the first quarter of the upcoming year, followed by an extended period of stable rates.
