South Korea’s harmonised inflation rate MoM for November 2025 registered at 0.10%, unchanged from the consensus estimate and down from 0.20% in October. This figure reflects a steady but moderate inflation environment amid a complex global backdrop. The geographic scope covers South Korea’s domestic economy, while the temporal focus is the latest monthly inflation update released on November 19, 2025, per the Sigmanomics database.

Drivers this month

• Energy prices stable, contributing 0.02 percentage points (pp)
• Food prices mildly deflationary, subtracting -0.01 pp
• Services inflation steady, adding 0.05 pp
• Core goods inflation flat, 0.04 pp

Policy pulse

The inflation rate remains close to the Bank of Korea’s 2% annual target when annualized, supporting a cautious monetary stance. The central bank has maintained its policy rate at 3.25%, signaling no immediate tightening but readiness to act if inflation accelerates.

Market lens

Immediate reaction: The South Korean won (KRWEUR) appreciated slightly by 0.10% post-release, while 2-year government bond yields edged down 3 basis points, reflecting market confidence in stable inflation. Breakeven inflation rates held steady near 1.80%.

Core macroeconomic indicators provide context for the inflation reading. South Korea’s GDP growth slowed to an annualized 1.90% in Q3 2025, down from 2.30% in Q2, reflecting weaker export demand. Unemployment remained low at 3.70%, supporting consumer spending. Wage growth moderated to 2.50% YoY, consistent with subdued inflation pressures.

Monetary Policy & Financial Conditions

The Bank of Korea’s neutral stance balances inflation risks and growth concerns. Financial conditions remain accommodative, with credit growth steady at 5.10% YoY. The central bank’s forward guidance emphasizes data dependency amid external uncertainties.

Fiscal Policy & Government Budget

Fiscal policy remains expansionary, with the government targeting a 3.80% of GDP deficit in 2025 to support growth and social spending. Infrastructure investments and subsidies for green energy aim to stimulate demand without overheating the economy.

External Shocks & Geopolitical Risks

Ongoing geopolitical tensions in Northeast Asia and supply chain disruptions from global trade frictions pose downside risks. Energy price volatility remains contained but could resurface if conflicts escalate.

Drivers this month

• Energy prices: 0.02 pp (stable oil and gas prices)
• Food prices: -0.01 pp (seasonal declines in fresh produce)
• Services: 0.05 pp (steady demand in housing and transport)
• Core goods: 0.04 pp (modest price increases in electronics)

Policy pulse

The current inflation trajectory supports the Bank of Korea’s wait-and-see approach. Inflation remains within a manageable range, reducing pressure for immediate rate hikes but keeping the door open for tightening if inflation rebounds.

Market lens

Immediate reaction: KRWEUR strengthened by 0.10%, 2-year yields fell 3 bps, and breakeven inflation rates remained flat. This reflects market confidence in the central bank’s inflation control and a balanced risk outlook.

Looking ahead, inflation in South Korea faces mixed forces. Domestic demand is expected to remain moderate, while global commodity prices could fluctuate due to geopolitical risks. The Bank of Korea’s policy stance will be data-dependent, balancing growth and inflation risks.

Bullish scenario (20% probability)

• Stronger global growth boosts exports and domestic demand
• Energy prices remain stable or decline
• Inflation rises moderately to 0.30% MoM by Q1 2026

Base scenario (60% probability)

• Inflation remains stable around 0.10–0.15% MoM
• Monetary policy stays on hold
• Gradual normalization of supply chains

Bearish scenario (20% probability)

• Geopolitical shocks push energy prices higher
• Supply chain disruptions cause price spikes
• Inflation accelerates above 0.30% MoM, prompting rate hikes

South Korea’s November 2025 harmonised inflation rate MoM of 0.10% confirms a steady, moderate inflation environment. The data aligns with a cautious but balanced monetary policy outlook amid external uncertainties. Structural trends suggest inflation will hover near the central bank’s target, with risks skewed slightly to the downside due to global growth concerns. Financial markets have priced in this stability, reflected in subdued bond yield and currency moves. Monitoring geopolitical developments and commodity prices will be critical for future inflation dynamics.

Key Markets Likely to React to Harmonised Inflation Rate MoM

The harmonised inflation rate MoM is closely watched by markets sensitive to South Korea’s economic health and monetary policy. Key instruments include:

• KOSPI – South Korea’s benchmark equity index, sensitive to inflation and growth outlook.
• KRWEUR – The South Korean won versus euro reflects currency market reactions to inflation data.
• USDKRW – USD/KRW exchange rate, a key barometer of capital flows and risk sentiment.
• BTCUSD – Bitcoin’s price often reacts to inflation expectations and monetary policy shifts globally.
• SAMSUNG – A major South Korean stock sensitive to domestic economic conditions and inflation.

FAQ

What is the Harmonised Inflation Rate MoM for South Korea?

The Harmonised Inflation Rate MoM measures the monthly percentage change in consumer prices, harmonised for international comparison.

How does the November 2025 inflation rate compare historically?

At 0.10%, November’s inflation is below the 12-month average of 0.54%, reflecting a slowdown from early 2025 peaks.

What are the main risks to South Korea’s inflation outlook?

Key risks include geopolitical tensions, commodity price shocks, and global supply chain disruptions.

Takeaway: South Korea’s inflation is stabilizing at moderate levels, supporting a balanced monetary policy amid global uncertainties.

This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.