South Korea's Retail Sales MoM for December 2025: Stagnation Continues Amid Economic Headwinds
Key Takeaways: South Korea’s retail sales for December 2025 remained unchanged at -0.70% month-over-month (MoM), matching November’s contraction and missing the -0.40% consensus estimate. This persistent decline highlights ongoing consumer caution amid tightening monetary conditions and external uncertainties. The 12-month average retail sales growth now stands near 0.30%, signaling subdued demand. Structural shifts and geopolitical risks continue to weigh on the sector, with muted prospects for near-term recovery.
Table of Contents
South Korea’s retail sales for December 2025 contracted by 0.70% MoM, unchanged from November’s -0.70%, and below the -0.40% consensus forecast, according to the latest data from the Sigmanomics database released on January 9, 2026. This marks the second consecutive month of decline, following a modest 1.60% increase in October 2025. The 12-month average growth rate now hovers around 0.30%, reflecting a broader slowdown in consumer spending over the past year.
Drivers this month
- Persistent inflationary pressures have eroded real incomes, limiting discretionary spending.
- Higher interest rates have tightened household credit conditions, curbing durable goods purchases.
- Geopolitical tensions in the region have dampened consumer confidence and tourism-related retail sales.
Policy pulse
The Bank of Korea’s recent rate hikes to combat inflation have contributed to tighter financial conditions. Retail sales contraction aligns with the central bank’s objective to moderate demand and rein in price pressures, though risks of a sharper slowdown remain.
Market lens
Following the release, the South Korean won (KRWEUR) weakened slightly, while short-term government bond yields edged higher, reflecting investor concerns over slowing domestic consumption. Equity markets showed muted reaction, with consumer discretionary sectors underperforming.
Retail sales are a critical barometer of household consumption, which accounts for roughly 55% of South Korea’s GDP. The December 2025 reading of -0.70% MoM continues a trend of subdued consumer activity observed since mid-2025. For context, October 2025 saw a rebound of 1.60%, but this was followed by two months of contraction (-0.70% in both November and December).
Comparative context
- December 2025: -0.70% MoM
- November 2025: -0.70% MoM
- October 2025: 1.60% MoM
- September 2025: 0.20% MoM
- 12-month average (Jan–Dec 2025): 0.30% MoM
- Year-over-year (Dec 2024 vs. Dec 2025): 0.50%
Monetary policy & financial conditions
The Bank of Korea has raised its policy rate by 125 basis points since early 2025, aiming to tame inflation that peaked near 5%. These hikes have increased borrowing costs, particularly impacting consumer loans and mortgages. Consequently, retail sales of big-ticket items such as automobiles and electronics have softened.
Fiscal policy & government budget
Government stimulus measures have been modest, focusing on targeted support rather than broad-based consumption incentives. The fiscal stance remains cautious amid rising public debt concerns, limiting the scope for aggressive demand-side interventions.
This chart highlights a clear deceleration in retail sales growth, reversing the brief upswing in October. The persistence of negative MoM readings suggests that consumer spending remains under pressure, likely due to tighter credit and inflationary headwinds. The trend points to a cautious consumer base, with limited upside in the near term.
Market lens
Immediate reaction: KRWEUR depreciated by 0.30% within the first hour post-release, while 2-year government bond yields rose by 5 basis points, reflecting concerns over slower domestic demand and potential growth risks.
Looking ahead, retail sales in South Korea face a mixed outlook shaped by monetary policy, external shocks, and structural trends. We outline three scenarios:
Bullish scenario (20% probability)
- Inflation eases faster than expected, allowing the Bank of Korea to pause rate hikes.
- Consumer confidence rebounds due to improved labor market conditions.
- Retail sales recover with MoM growth returning to 0.50% or higher by Q2 2026.
Base scenario (55% probability)
- Inflation moderates gradually, with monetary policy remaining restrictive.
- Retail sales remain flat to slightly negative (-0.20% to 0%) through early 2026.
- Government maintains cautious fiscal support without major stimulus.
Bearish scenario (25% probability)
- Geopolitical tensions escalate, disrupting trade and consumer sentiment.
- Inflation remains sticky, forcing further rate hikes and deepening credit constraints.
- Retail sales contract further, with MoM declines exceeding -1% in early 2026.
Structural & long-run trends
South Korea’s retail sector is also adapting to longer-term shifts, including e-commerce growth, demographic aging, and changing consumer preferences. These factors may dampen traditional retail sales but open new avenues for digital and experiential retail formats.
South Korea’s December 2025 retail sales data from the Sigmanomics database underscores a challenging environment for consumer spending. The persistent -0.70% MoM contraction signals ongoing headwinds from monetary tightening, inflation, and geopolitical risks. While structural changes offer some growth potential, near-term prospects remain subdued. Policymakers face a delicate balance between controlling inflation and supporting growth. Market participants should monitor upcoming inflation prints, central bank guidance, and geopolitical developments closely.
Key Markets Likely to React to Retail Sales MoM
Retail sales data is a vital gauge of South Korea’s economic health, influencing currency, bond, equity, and commodity markets. The following tradable symbols historically track or react to shifts in South Korean retail sales, reflecting their sensitivity to domestic consumption trends and macroeconomic conditions.
- KRWEUR – South Korean won vs. Euro, sensitive to domestic economic data and capital flows.
- KOSPI – South Korea’s benchmark equity index, influenced by consumer sector performance.
- BTCUSD – Bitcoin vs. USD, often reflecting risk sentiment shifts tied to macroeconomic data.
- USDKRW – USD vs. South Korean won, a key pair reacting to economic fundamentals and capital flows.
- SAMSUNG – Major South Korean tech stock, sensitive to domestic consumption and export trends.
Insight: Retail Sales vs. KRWEUR Since 2020
Since 2020, South Korea’s retail sales MoM have shown a moderate inverse correlation with the KRWEUR exchange rate. Periods of retail sales contraction often coincide with KRW depreciation against the euro, reflecting weaker domestic demand and capital outflows. Notably, during the COVID-19 pandemic’s peak in early 2020, retail sales plunged sharply, and KRWEUR depreciated by over 10%. This relationship underscores the currency’s sensitivity to consumer spending trends and broader economic sentiment.
FAQs
- What does South Korea’s Retail Sales MoM indicate?
- Retail Sales MoM measures the monthly change in consumer spending, a key driver of economic growth and inflation.
- How does the December 2025 reading compare to previous months?
- December’s -0.70% MoM matches November’s decline, reversing October’s 1.60% growth and signaling sustained weakness.
- Why is this data important for investors?
- Retail sales impact currency valuations, equity markets, and monetary policy expectations, guiding investment decisions.
Takeaway: South Korea’s retail sales contraction in December 2025 highlights persistent consumer caution amid tightening financial conditions and geopolitical uncertainty. The data suggests a cautious outlook for domestic demand, with policy and external factors shaping the recovery trajectory.
Updated 1/9/26
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
December 2025 retail sales contracted by 0.70% MoM, unchanged from November’s -0.70%, and below the 12-month average of 0.30%. This persistence of negative growth contrasts with October’s 1.60% rebound, signaling a reversal of earlier momentum.
Seasonal adjustments and inflation effects have played a role in dampening nominal sales figures. The chart below illustrates the flattening trend since mid-2025, with retail sales hovering near zero or negative territory.