South Korea’s Core Inflation Rate YoY: November 2025 Analysis and Macro Outlook
Key takeaways: South Korea’s core inflation eased to 3.00% YoY in November, below estimates and last month’s 3.60%. This marks a notable slowdown from the summer peak of 3.60%. The moderation reflects easing supply pressures and cautious consumer demand. Monetary policy remains vigilant amid persistent inflation above the 2% target. External risks from global trade tensions and energy prices continue to cloud the outlook. Financial markets showed muted reaction, signaling cautious optimism. Structural inflation drivers remain, but the pace of price growth may stabilize near the central bank’s comfort zone in coming months.
Table of Contents
South Korea’s core inflation rate year-over-year (YoY) for November 2025 registered at 3.00%, down from 3.60% in October and below the consensus estimate of 3.50%, according to the latest data from the Sigmanomics database[1]. This marks the first significant deceleration since the summer peak of 3.60% in August and October. The easing core inflation signals a moderation in underlying price pressures excluding volatile food and energy components.
Drivers this month
- Shelter costs contributed 0.15 percentage points (pp), down from 0.25 pp last month.
- Used car prices declined by -0.07 pp, reflecting softer demand.
- Services inflation remained steady at 0.90% YoY, supporting core stability.
- Durable goods prices showed mild deflationary trends, easing overall inflation.
Policy pulse
The Bank of Korea’s 2% inflation target remains unmet, but the downward trend in core inflation provides some relief. The current 3.00% reading sits closer to the target band than the 3.60% peak, suggesting that recent monetary tightening measures may be gaining traction. The central bank’s cautious stance on further rate hikes reflects this evolving inflation dynamic.
Market lens
Immediate reaction: The Korean won (KRW) appreciated modestly by 0.30% against the US dollar within the first hour post-release, while 2-year government bond yields fell by 5 basis points, signaling investor relief. Breakeven inflation swaps also declined slightly, reflecting tempered inflation expectations.
Core inflation is a critical macroeconomic indicator reflecting underlying price trends stripped of volatile items. South Korea’s 3.00% core inflation remains elevated compared to the 12-month average of 3.10%, but shows a clear deceleration from the 3.60% peak in October. This moderation aligns with easing global commodity prices and a slowdown in domestic demand growth.
Monetary policy & financial conditions
The Bank of Korea has maintained a tightening bias since early 2025, raising the policy rate by 125 basis points since January. Financial conditions have tightened, with lending rates rising and credit growth slowing. The recent core inflation print supports the view that monetary policy is beginning to curb inflationary pressures, though risks remain from wage growth and imported inflation.
Fiscal policy & government budget
Fiscal policy remains moderately expansionary, with the government continuing targeted stimulus in infrastructure and social welfare. The budget deficit is projected at 3.20% of GDP for 2025, slightly higher than the previous year. This fiscal stance supports growth but may limit disinflationary momentum if demand remains resilient.
External shocks & geopolitical risks
South Korea faces ongoing external risks from geopolitical tensions in East Asia and volatile global trade conditions. Energy prices have stabilized but remain vulnerable to supply disruptions. These factors could reintroduce inflationary shocks, complicating the inflation outlook.
Chart insight
The chart illustrates a clear peak in core inflation during summer 2025, followed by a gradual decline. This suggests that the Bank of Korea’s rate hikes and global commodity price stabilization are effectively dampening inflation. However, the rate remains above the 2% target, indicating persistent underlying inflationary forces.
What This Chart Tells Us: Core inflation is trending downward, reversing a two-month rise. This signals that inflationary pressures may be stabilizing, but vigilance is needed as the rate remains elevated above target.
Market lens
Immediate reaction: The KRW strengthened modestly, and 2-year yields declined, reflecting market confidence in inflation moderation. Inflation-linked bonds saw slight price gains, while breakeven inflation rates edged lower, signaling reduced inflation risk premiums.
Looking ahead, South Korea’s core inflation trajectory will depend on several factors, including monetary policy, global commodity prices, and domestic demand. The Bank of Korea is likely to maintain a cautious approach, balancing inflation control with growth support.
Bullish scenario (20% probability)
- Core inflation falls below 2.50% by Q2 2026 as monetary tightening fully takes effect.
- Global energy prices decline further, easing imported inflation.
- Domestic demand softens, reducing price pressures.
Base scenario (60% probability)
- Core inflation stabilizes around 3.00% through early 2026.
- Monetary policy remains steady, with no further rate hikes.
- External risks persist but are contained.
Bearish scenario (20% probability)
- Inflation rebounds above 3.50% due to wage pressures and supply shocks.
- Geopolitical tensions disrupt trade and energy supplies.
- Monetary policy tightens further, risking growth slowdown.
South Korea’s November 2025 core inflation rate of 3.00% YoY marks a welcome easing from recent highs but remains above the central bank’s 2% target. The data suggest that monetary policy is beginning to temper inflation, though risks from external shocks and structural inflation drivers persist. Financial markets have responded with cautious optimism, reflecting a balanced view of inflation risks. Policymakers face the challenge of sustaining disinflation without stifling growth. Close monitoring of wage trends, commodity prices, and geopolitical developments will be critical in the coming months.
Key Markets Likely to React to Core Inflation Rate YoY
Core inflation data in South Korea typically influence currency, bond, and equity markets sensitive to interest rate expectations and economic growth. The following tradable symbols historically track or react to changes in inflation dynamics:
- KRWUSD – The Korean won to US dollar pair often moves with inflation surprises affecting monetary policy expectations.
- KOSPI – South Korea’s main stock index, sensitive to inflation-driven interest rate changes.
- 005930.KS – Samsung Electronics, a bellwether stock impacted by macroeconomic shifts and currency fluctuations.
- BTCUSD – Bitcoin, often viewed as an inflation hedge, reacts to inflation data globally.
- USDKRW – The inverse of KRWUSD, also sensitive to inflation and monetary policy shifts.
Indicator vs. KRWUSD Since 2020
Since 2020, South Korea’s core inflation rate and the KRWUSD exchange rate have shown a moderate inverse correlation. Periods of rising inflation often coincide with KRW depreciation due to expectations of tighter monetary policy and slower growth. For example, the 2025 mid-year inflation peak at 3.60% coincided with a 4% KRWUSD depreciation. Conversely, recent easing in inflation to 3.00% has supported a 0.30% KRW appreciation post-release, highlighting the currency’s sensitivity to inflation trends.
FAQs
- What is the current Core Inflation Rate YoY for South Korea?
- The latest core inflation rate for South Korea is 3.00% year-over-year as of November 2025.
- How does the Core Inflation Rate YoY affect South Korea’s monetary policy?
- Core inflation above the 2% target prompts the Bank of Korea to consider tightening monetary policy to control price pressures.
- What are the main risks to South Korea’s inflation outlook?
- Risks include global commodity price volatility, geopolitical tensions, and domestic wage growth that could push inflation higher.
Final takeaway: South Korea’s core inflation is cooling but remains elevated, requiring balanced policy action amid external uncertainties.
Sources
- Sigmanomics database, Core Inflation Rate YoY South Korea, November 2025 release.
- Bank of Korea Monetary Policy Reports, 2025.
- South Korea Ministry of Economy and Finance, 2025 Budget Outlook.
The November 2025 core inflation rate of 3.00% YoY represents a decline from October’s 3.60% and is slightly below the 12-month average of 3.10%. This marks a reversal of the upward trend seen through mid-2025, when inflation peaked at 3.60% in August and October.
Monthly data show a steady deceleration since June’s 3.30%, with the latest print indicating that inflationary pressures are easing across key sectors such as housing and durable goods. The moderation is consistent with tighter monetary policy and softer consumer demand.