DAEJEON: South Korea’s consumer prices rose 2.2% in March from a year earlier, accelerating from 2.0% in February as higher oil costs pushed up transport-related prices, official data showed on Thursday. On a monthly basis, the consumer price index rose 0.3%, matching the pace seen in February. The reading placed inflation back above the Bank of Korea’s 2% target, even as the increase came in below the 2.4% estimate expected by economists.
The latest data showed energy-linked categories carrying much of the increase. Transport prices climbed 3.4% from the previous month and were up 5.0% from a year earlier, reflecting the effect of higher fuel costs on household spending. Petroleum products rose 10.4% on the month, underscoring the speed of the increase in oil-related prices. At the same time, some food categories moved lower, helping limit the overall gain in the headline inflation rate.
Food and non-alcoholic beverage prices fell 0.9% from February, while agricultural products dropped 3.0% on the month as supply conditions improved. Those declines helped offset part of the pressure from fuel and transport costs and kept the overall inflation figure below market expectations. Core inflation, which excludes food and energy, rose 2.2% from a year earlier in March, easing from 2.3% in February and suggesting that broader underlying price pressures were steadier than the headline rate.
Oil-driven pressures
The March figures arrived as South Korea moved to blunt the impact of higher global crude prices on households and businesses. Authorities have introduced fuel price caps, a rare intervention designed to slow the pass-through of oil costs to consumers. Even with those controls in place, the monthly jump in petroleum prices showed that energy costs remained a significant source of inflationary pressure across the economy, especially in transport and related consumer services.
The government has also proposed a supplementary budget of 26.2 trillion won to cushion the economy from the oil shock. Of that amount, 10.1 trillion won is earmarked for oil-price relief measures, including 5 trillion won to support refiners affected by the new price caps. The package reflects the importance of energy costs to the inflation outlook in South Korea, which remains highly exposed to swings in imported crude prices and related supply conditions.
Policy focus sharpens
The inflation report comes ahead of the Bank of Korea’s next monetary policy meeting on April 10. The central bank left its base rate unchanged at 2.50% on February 26 and in its latest economic outlook raised its forecast for consumer inflation in 2026 to 2.2% from 2.1%. The bank’s formal inflation target remains 2.0%, placing added attention on whether higher energy prices continue to keep headline inflation above that level in the months ahead.
March marked the highest annual inflation reading since December and ended two months in which headline consumer prices had held at 2.0%. While the latest data showed food prices helping to moderate the overall rise, the pickup in fuel and transport costs reinforced the role of imported energy in shaping the inflation path. For policymakers and markets, the report highlighted the balance between easing core price pressures and renewed oil-driven strain on household costs – By Content Syndication Services.