February Inflation Rate Holds Steady at 2%... Pressure from Middle East Expected to Rise in March

Petroleum Prices Down 2.4% from a Year Ago

Sharp Drop in Agricultural Prices, but Livestock and Fishery Products Still Soaring

Holiday Demand for Accommodation and Rental Cars Drives Service Prices Higher

The consumer price inflation rate in February, which included the Lunar New Year holiday, remained at 2.0% for the second consecutive month, matching January’s rate. The main factor was the drop in international oil prices last month, leading to a decline in petroleum product prices such as gasoline and diesel for the first time in six months. Prices of agricultural products like carrots, radishes, and cabbage also fell compared to a year ago. Additionally, after the Fair Trade Commission cracked down on price collusion, the upward trend in processed food prices that had been driving up grocery costs has shown signs of stabilizing. However, the continued high prices of livestock and fishery products still burden consumers, and with oil prices already surging due to the Middle East crisis, it remains uncertain whether inflation will remain stable.

On the 6th, one day after President Lee Jae-myung ordered a strict response to profiteering on oil prices, a gas station in downtown Seoul was selling fuel at a price 20 won higher than the previous day (right photo). Earlier, on the 5th, the president held a temporary cabinet meeting and instructed the prompt designation of 'maximum prices' for petroleum products by region and type to curb the rapid rise in fuel prices and hoarding. Photo by Yoon Dongju

According to the “Consumer Price Trends for February” released by the National Data Office on the 6th, last month’s consumer price index stood at 118.40 (2020=100), up 2.0% from a year earlier. This sustained the 2.0% inflation target set by the Bank of Korea for the second month in a row. The consumer price growth rate, which was 2.4% in October and November last year, declined to 2.3% in December and has continued to stabilize.

In particular, due to the decline in international oil prices, the petroleum product price change rate turned negative at -2.4%, marking the first decrease in six months since August 2025, and this lowered overall inflation by 0.09 percentage points. For example, the price of Dubai crude oil fell from 77.9 dollars in February 2025 to 68.4 dollars in February 2026. However, international oil prices are likely to rise again in March, as the Strait of Hormuz—a key oil transport route—has been effectively blocked following a U.S. airstrike on Iran. Lee Dowon, Director of Economic Statistics Review at the National Data Office, explained, “Given the changes in the Middle East situation as of February 28, we expect gasoline prices to rise starting in March.”

Prices of agricultural, livestock, and fishery products rose only 1.7% year-on-year, a smaller increase than January’s 2.6%. Trends varied by item. The price of rice jumped 17.7%, marking the seventh consecutive month of double-digit increases, driven by reduced cultivation areas and decreased production since August last year. In contrast, prices for tangerines (-20.5%), cabbage (-21.8%), radishes (-37.5%), pears (-26.0%), carrots (-44.8%), onions (-17.2%), and cabbages (-29.5%) saw significant declines. Director Lee explained, “There was an increase in agricultural supply, and the base effect from the sharp rise in fruit prices a year ago contributed to the declines.”

On the other hand, livestock product prices rose 6.0%, pushing up overall inflation by 0.15 percentage points, with a greater increase than January’s 4.1%. Director Lee stated, “In the case of pork, the number of pigs slaughtered decreased due to African swine fever and holiday consumption decreased, resulting in a 7.3% price jump.” Imported beef prices also continued to show a high growth rate at 5.0%. Price increases for fishery products narrowed to 4.4% from January’s 5.9%, but still remained well above the average, continuing to drive up consumer prices.

Processed food prices rose by 2.1%, marking the lowest level since December 2024 (2.0%). Compared to the previous month, there was actually a 0.4% decrease. This is attributed to large supermarkets offering discounts for the Lunar New Year and the impact of the Fair Trade Commission’s detection of price collusion on sugar and flour among food companies, which has begun to bring down factory prices. Director Lee commented, “In February, items such as red ginseng, pancake mix, and starch syrup, which are heavily consumed during the holiday, were on sale, reducing the price increase. Although food companies have lowered factory prices by 5% following the Fair Trade Commission's crackdown on collusion, it will take some time for this to be fully reflected in consumer prices.”

Service prices rose 2.6%, driven by a 3.5% increase in personal services. Within personal services (excluding dining out), prices rose 3.9%, contributing 0.77 percentage points to overall inflation. The Lunar New Year holiday led to significant increases in travel and accommodation-related prices. Notably, car rental fees surged by 37.1%, the largest jump since related statistics began in 1995. Director Lee explained, “The extended public holiday during Lunar New Year led to a surge in demand for rental cars, causing rental prices to spike.”

The living price index, which reflects the perceived cost of living and is composed of frequently purchased items, rose 1.8%. The fresh food index, often referred to as the “meal price” index, fell 2.7%. The core inflation index, excluding agricultural products and petroleum, rose by 2.5%. According to the Organization for Economic Cooperation and Development (OECD) standards, the core inflation index excluding food and energy rose by 2.3%.

With the escalation of tensions in the Middle East, consumer price volatility in March is expected to be high due to rising international oil prices and other factors. The government is stepping up efforts to stabilize prices. An official from the Ministry of Economy and Finance stated, “Given the uncertainties from future geopolitical factors and weather conditions, the government will make every effort to stabilize perceived inflation. In particular, with the recent increase in volatility in international oil prices due to the Middle East situation, we plan to closely monitor petroleum prices and supply-demand conditions and respond swiftly to stabilize prices.”

This content was produced with the assistance of AI translation services.