Energy-driven disinflation masks steady services inflation and leaves policy exposed to oil and currency volatility

South Korea’s consumer prices rose 2% from a year earlier in January, the slowest pace in five months, as petroleum product prices flattened and agricultural price pressures eased, government data showed Tuesday. Consumer prices rose 0.4% from the previous month, according to the Ministry of Data and Statistics, with declines in industrial goods offset by higher prices for services, food and utilities.

The Bank of Korea (BOK) said inflation is expected to remain around its 2% target in February, but cautioned that volatility in global oil prices and the won-dollar exchange rate could still affect the outlook. Deputy Governor Kim Woong said January’s moderation was driven mainly by slower increases in petroleum and agricultural prices, while the central bank maintained its November forecast that consumer prices will rise 2.1% in 2026. The Korean won has recently traded near the 1,450-per-dollar level.

South Korea’s consumer prices rose 2% from a year earlier in January, the slowest pace in five months, as petroleum product prices flattened and agricultural price pressures eased, government data showed Tuesday. Consumer prices rose 0.4% from the previous month, according to the Ministry of Data and Statistics, with declines in industrial goods offset by higher prices for services, food and utilities.

The Bank of Korea (BOK) said inflation is expected to remain around its 2% target in February, but cautioned that volatility in global oil prices and the won-dollar exchange rate could still affect the outlook. Deputy Governor Kim Woong said January’s moderation was driven mainly by slower increases in petroleum and agricultural prices, while the central bank maintained its November forecast that consumer prices will rise 2.1% in 2026. The Korean won has recently traded near the 1,450-per-dollar level.

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