South Korea's inflation rate has dropped to a five-month low.

In January, South Korea's overall inflation rate dropped to a five-month low, in line with the annual target of the country's central bank. The South Korean Statistics Office said on Tuesday that the benchmark consumer price index rose by 2.0% compared to the same period last year, lower than the 2.3% increase in December. This latest data is the lowest level since August 2025, lower than the median forecast of 2.1% given by nine economists surveyed by the media. The data from the South Korean Statistics Office shows that the decline in energy prices offset the seasonal inflationary pressure brought by the rise in agricultural prices before the Chinese New Year holiday in mid-February. Analysts said that extending the fuel tax reduction measures also helped to curb price increases. Consumer prices rose by 0.4% month-on-month in January, also lower than the median forecast of a 0.5% increase. In December, consumer prices rose by 0.3% month-on-month. The core CPI, excluding the more volatile food and energy prices, rose by 2.0% year-on-year in January and by 0.5% month-on-month. The Bank of Korea said in a policy report in December that it expects the average inflation rate for this year to be 2.1%, the same as last year.