South Korea’s annual inflation rate eased to 2.8% in July 2026, its slowest pace since April, down from 3.2% in June, which had been the fastest increase since December 2023. The July figure came in below market expectations of 3.0%, but remained above the central bank’s 2% target.
Price pressures in the transport sector weakened (7.7% vs 11.1% in June) as earlier increases in diesel and gasoline prices began to fade. Inflation for food and non-alcoholic beverages also slowed to a three-month low (0.9% vs 2.0%), as did alcoholic beverages and tobacco (0.2% vs 0.5%).
In contrast, inflation picked up in several categories: housing and utilities (1.8% vs 1.7%), clothing and footwear (2.8% vs 2.6%), recreation and culture (5.5% vs 5.4%), and restaurants and hotels (2.8% vs 2.7%).
On a monthly basis, consumer prices unexpectedly fell by 0.2%, compared with market forecasts for a 0.1% increase. This was the first month-on-month decline since November 2025, driven by lower prices in transport, food, and housing.