Einar H. Dyvik
Research expert covering Nordics and global data for society, economy, and politics
Inflation in South Korea - statistics & facts
Over the past few decades, South Korea's inflation has remained relatively moderate, aligning with or slightly below the average of the Organization for Economic Cooperation and Development (OECD). However, the prices of essential items, particularly food and clothing, have been significantly higher compared to global standards. The COVID-19 pandemic in 2020 and the Russian invasion of Ukraine in 2022 pushed South Korea’s inflation to its highest level since the Asian financial crisis of 1998. Fortunately, the rate has since stabilized, settling at around 3.6 percent in 2023. Despite this improvement, high prices for basic necessities remain a significant burden for many Koreans, especially for those in vulnerable groups. The government has taken steps to address the issue, but ongoing price volatility – especially in the agricultural sector – remains a major long-term challenge.
In contrast, the prices for electricity, gas, water, and public transportation are notably lower than in other countries, approximately 27 percent below the OECD average. For example, water and electricity prices are roughly half of what is typically found among these countries. This price disparity can be largely attributed to proactive government policies aimed at regulating and maintaining affordable public rates for consumers.
South Korea's price dynamics: High grocery costs and low utility rates
In recent decades, South Korea has experienced an increase in income, which has been accompanied by rising domestic prices. While overall price levels in South Korea are around the OECD average, the costs of groceries and clothing are significantly higher – approximately 1.5 to 1.6 times higher than average. For example, agricultural products such as potatoes, pork, and apples can be two to three times more expensive than in other developed countries. This high pricing is often attributed to several factors, including restricted imports of fresh fruits and vegetables, limited availability of agricultural land, and generally low productivity levels within the agricultural sector.In contrast, the prices for electricity, gas, water, and public transportation are notably lower than in other countries, approximately 27 percent below the OECD average. For example, water and electricity prices are roughly half of what is typically found among these countries. This price disparity can be largely attributed to proactive government policies aimed at regulating and maintaining affordable public rates for consumers.
Addressing rising food prices
The rising cost of food has disproportionately impacted low-income and vulnerable groups, particularly the elderly. In recent years, low-income households have spent a larger share of their income on food and non-alcoholic beverages, while the opposite has been seen in wealthier households. According to a survey conducted in 2024, nearly 60 percent of respondents believed that stabilizing consumer prices should be the highest priority for the current South Korean government. In response to this concern, the government has formed an interagency task force to address rising food prices. Additionally, the Bank of Korea has called for structural reforms aimed at boosting agricultural productivity and diversifying supply chains. However, with agricultural price volatility expected to rise in the future due to an aging farmer population, it remains to be seen how the government will address these challenges in the long term.
