South Korea’s consumer prices rose 2.1% in March from a year earlier, marking the third straight month that inflation exceeded the central bank’s 2% target. The increase was driven by rising food prices, as major food companies hiked prices amid higher global raw material costs and domestic political uncertainty.
Data from Statistics Korea released on April 2 showed that the consumer price index (CPI) stood at 116.29 in March, up 2.1% year-on-year. Inflation had remained in the 1% range for four months from September to December 2024 before accelerating to 2.2% in January and 2.0% in February.
Petroleum prices, which had been a key inflationary factor earlier this year, rose 2.8% in March. The increase was modest as lower global oil prices, driven by expanded U.S. crude production, gradually fed through to domestic markets. On a monthly basis, gasoline and diesel prices fell 2.1% and 2.2%, respectively.
However, processed food and dining costs surged, keeping inflation above the central bank’s target. Processed food prices jumped 3.6% in March from a year earlier, the sharpest increase since January 2024. Price hikes were particularly pronounced in items such as coffee (8.3%) and bread (6.3%) due to rising raw material costs. Analysts noted that some food manufacturers took advantage of political instability to push through price increases beyond what could be justified by cost pressures alone.
Higher food costs also led to increased restaurant prices, with dining inflation rising 3.0% for the second straight month. Popular menu items such as sashimi (5.4%) and fried chicken (5.3%) saw significant price hikes, intensifying consumer frustration over rising dining costs.
Excluding volatile food and energy prices, core inflation rose 1.9% year-on-year in March, extending a six-month streak of increases in the 1% range. Meanwhile, the cost-of-living index, which tracks 144 frequently purchased goods and services, climbed 2.4%, outpacing overall inflation for a fifth straight month.
