{"id":2208289,"date":"2025-02-06T08:00:13","date_gmt":"2025-02-05T23:00:13","guid":{"rendered":"https:\/\/koreapro.org\/?p=2208289"},"modified":"2025-02-05T15:37:07","modified_gmt":"2025-02-05T06:37:07","slug":"korean-inflation-surges-as-weak-won-drives-up-import-costs-and-energy-prices","status":"publish","type":"post","link":"https:\/\/koreapro.org\/2025\/02\/korean-inflation-surges-as-weak-won-drives-up-import-costs-and-energy-prices\/","title":{"rendered":"Korean inflation surges as weak won drives up import costs and energy prices"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">South Korea\u2019s consumer prices rose <\/span><a href=\"https:\/\/kostat.go.kr\/board.es?mid=a10301010000&amp;bid=213&amp;list_no=434968&amp;act=view&amp;mainXml=Y\"><span style=\"font-weight: 400;\">2.2% year-on-year<\/span><\/a><span style=\"font-weight: 400;\"> in January, marking the fastest increase in five months, according to Statistics Korea data released Wednesday. Inflation accelerated from 1.9% in December, driven by higher energy costs, a weaker won and base effects from last year. Monthly inflation also climbed 0.7%, with prices rising across all major categories, including services, industrial goods and fresh food.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Petroleum product prices surged 7.3% year-on-year, the steepest increase since July 2024, as recent currency depreciation pushed up import costs. Core inflation, which excludes volatile food and energy prices, rose 1.9%, remaining below 2% for the fourth consecutive month. Prices of daily necessities climbed 2.5%, slightly faster than December\u2019s 2.2% gain. The finance ministry <\/span><a href=\"https:\/\/www.moef.go.kr\/nw\/nes\/detailNesDtaView.do?searchBbsId1=MOSFBBS_000000000028&amp;searchNttId1=MOSF_000000000072489&amp;menuNo=4010100\"><span style=\"font-weight: 400;\">pledged<\/span><\/a><span style=\"font-weight: 400;\"> continued vigilance and extended tariff rate quotas on energy and food imports to contain inflationary pressures.<\/span><\/p>\n<p><b>WHY IT MATTERS<\/b><\/p>\n<p><span style=\"font-weight: 400;\">The latest inflation surge puts the Bank of Korea (BOK) in a policy bind, as it struggles to balance currency stability and economic stimulus. A <\/span><a href=\"https:\/\/koreapro.org\/2025\/01\/fed-holds-rates-steady-putting-south-korea-in-a-bind\/\"><span style=\"font-weight: 400;\">1.5 percentage point gap<\/span><\/a><span style=\"font-weight: 400;\"> between U.S. and South Korean interest rates has already weakened the won, raising import costs and fueling inflation. While the BOK is still expected to cut rates this month, the BOK will likely adopt a more cautious approach going forward.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Compounding the problem, South Korea\u2019s economy is already in a fragile state. Morgan Stanley recently <\/span><a href=\"https:\/\/koreapro.org\/2025\/01\/morgan-stanley-slashes-south-koreas-2025-growth-outlook-to-1-5\/\"><span style=\"font-weight: 400;\">slashed<\/span><\/a><span style=\"font-weight: 400;\"> the country\u2019s 2025 GDP growth forecast to 1.5%, warning that weak consumer spending and slowing exports will drag down recovery despite last year\u2019s rate cuts. Political uncertainty following President Yoon Suk-yeol\u2019s impeachment has further <\/span><a href=\"https:\/\/koreapro.org\/2025\/01\/economic-recovery-at-stake-as-south-koreas-rival-parties-debate-fiscal-measures\/\"><span style=\"font-weight: 400;\">delayed fiscal stimulus measures<\/span><\/a><span style=\"font-weight: 400;\">, leaving businesses and consumers exposed to external risks.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Moreover, the U.S.-Canada <\/span><a href=\"https:\/\/koreapro.org\/2025\/02\/us-imposes-25-tariffs-on-canada-over-opioid-crisis-raising-korea-trade-fears\/\"><span style=\"font-weight: 400;\">tariff war<\/span><\/a><span style=\"font-weight: 400;\">, which has been put on <\/span><a href=\"https:\/\/www.whitehouse.gov\/presidential-actions\/2025\/02\/progress-on-the-situation-at-our-northern-border\/\"><span style=\"font-weight: 400;\">pause<\/span><\/a><span style=\"font-weight: 400;\"> for a month, and Trump\u2019s protectionist stance threaten supply chains and price stability, with potential spillover effects on South Korean manufacturers. If exchange rate volatility persists and external inflationary shocks mount, the government may struggle to maintain economic stability.<\/span><\/p>\n<div class=\"content-tags\"><a href=\"https:\/\/koreapro.org\/tag\/business-economy\/\"><span class=\"tag\">Business &amp; Economy<\/span><\/a><\/div>","protected":false},"excerpt":{"rendered":"<p>South Korea\u2019s consumer prices rose 2.2% year-on-year in January, marking the fastest increase in five months, according to Statistics Korea data released Wednesday. Inflation accelerated from 1.9% in December, driven by higher energy costs, a weaker won and base effects from last year. Monthly inflation also climbed 0.7%, with prices rising across all major categories, [&hellip;]<\/p>\n","protected":false},"author":10407,"featured_media":2208290,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[30],"tags":[24],"class_list":["post-2208289","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-briefings","tag-business-economy"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.7 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Korean inflation surges as weak won drives up import costs and energy prices - Korea Pro<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/koreapro.org\/2025\/02\/korean-inflation-surges-as-weak-won-drives-up-import-costs-and-energy-prices\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Korean inflation surges as weak won drives up import costs and energy prices - Korea Pro\" \/>\n<meta property=\"og:description\" content=\"South Korea\u2019s consumer prices rose 2.2% year-on-year in January, marking the fastest increase in five months, according to Statistics Korea data released Wednesday. 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