S. Korea's inflation holds at 2.0% as fuel prices rise, fresh produce costs dropped in February

Korea's inflation rose moderately in February, gaining two-percent from a year ago, but oil costs were still high.

Moon Hye-ryeon has the details.

Consumer price hikes in South Korea showed signs of a gradual slowdown, but inflation continues to hover in the two percent range.

Data from Statistics Korea on Thursday shows that the country's consumer price index – a key gauge of inflation – rose two percent in February year-on-year.

This is a slight decline compared to the two-point-two percent growth seen in January, following three consecutive months of rising inflation figures.

A surge in oil prices was a key factor in continued consumer price growth.

Last month, petroleum product prices jumped by six-point-three percent year-on-year, marking the second consecutive month of price hikes of more than five percent.

This is the first time since 2022 that fuel prices have recorded such sustained increases.

Gasoline prices in particular spiked by more than seven percent.

"The 6.3 percent increase is mainly due to factors like exchange rates and smaller cuts in fuel taxes. Compared to last February, global oil prices haven't changed much, but these domestic factors have driven up fuel prices."

The government lowered its fuel tax cuts back in November last year – reducing the tax cut rate for gasoline from 20 percent to 15 percent, and 30 percent to 23 percent for diesel.

And following the inauguration of U.S. President Donald Trump towards the end of January, the U.S. dollar has seen jumps alongside his new tariff policies.

Reflecting the burden of higher fuel costs, the cost of living index rose by two-point-six percent last month with the added weight of processed food prices shooting up.

The index measures 140 items commonly bought by consumers, and this increase is the sharpest seen since July last year.

However, prices of fresh produce fell by one-point-four percent – recording the first year-on-year drop since March 2022.

In particular, the cost of fresh fruit fell by more than five percent, which the agency attributed to the base effect of high prices last year.

During a review of price trends on the same day, the Bank of Korea noted that there is significant uncertainty in the inflation outlook due to geopolitical tensions, trade conflicts among major economies, exchange rate fluctuations, and domestic demand trends.

Moon Hye-ryeon, Arirang News.