Ministry of Economy and Finance

The consumer price index (CPI) in January increased by 2.0% year-on-year (2.3% in December), as the pace of price increases for agricultural, livestock, and fisheries products moderated due to a larger decline in vegetable prices and increased livestock slaughter volumes.   Core inflation, which reflects the underlying trend by excluding volatile food and energy prices, rose by 2.0% year-on-year (2.0% in December). The CPI for living necessities, which tracks items with a high share of household spending, climbed by 2.2% year-on-year (2.8% in December).                                                                                  Consumer Price Index (%) 2025 2026 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan y-o-y 2.2 2.0 2.1 2.1 1.9 2.2 2.1 1.7 2.1 2.4 2.4 2.3 2.0 m-o-m 0.7 0.3 0.2 0.1 -0.1 0.0 0.2 -0.1 0.5 0.3 -0.2 0.3 0.4                                                                                  Core Inflation (y-o-y, %) 2025 2026 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan CPI excluding food and energy prices 1.9 1.8 1.9 2.1 2.0 2.0 2.0 1.3 2.0 2.2 2.0 2.0 2.0 CPI excluding agricultural product and petroleum prices 2.0 1.9 2.1 2.4 2.3 2.4 2.3 1.9 2.4 2.5 2.3 2.3 2.3                                                                                 CPI for living necessities (y-o-y, %) 2025 2026 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan CPI for living necessities 2.5 2.6 2.4 2.4 2.3 2.5 2.5 1.5 2.5 2.5 2.9 2.8 2.2     Given the uncertainties ahead, such as volatility in global oil prices and winter weather conditions, the government will make every effort to stabilize perceived inflation. In particular, it will ensure the smooth implementation of measures to stabilize livelihoods ahead of the Lunar New Year, including supply and demand management of key holiday items, to ease the cost-of-living burden on the public, while proactively mitigating factors contributing to price instability in livestock products through thorough prevention and control of animal infectious diseases, including avian influenza (AI). Please refer to the attached files. 

The Consumer Price Index was 118.03 (2020=100) in January 2026. The index increased 0.4 percent from the preceding month and rose 2.0 percent from the same month of the previous year. Please refer to the attached pdf for the full report.

1. Key Points of Fitch Ratings’ Rating Action Commentary   On January 30, global credit rating agency Fitch Ratings announced that it has maintained Korea’s sovereign credit rating at ‘AA-’ with a stable outlook. Korea’s GDP growth is projected to recover from 1.0 percent last year to 2.0 percent this year, supported by strong private consumption, with net exports expected to continue serving as an underlying growth driver, particularly on the back of semiconductor exports. However, trade-related issues with the US, including reciprocal tariffs, are cited as a remaining risk factor.   Meanwhile, Fitch revised down its estimate of Korea’s potential growth rate from 2.1 percent to 1.9 percent to reflect the decline in the working-age population, while adding that the government is strengthening efforts to enhance productivity, including large-scale investments in AI and other high-tech industries, to offset downward pressure on growth stemming from demographic changes.   In addition, Fitch assessed that political volatility arising from the declaration of martial law and the impeachment of the president was resolved with the inauguration of a new government last year, and that sufficient momentum for policy implementation has been secured given the ruling party’s majority in parliament.   With regard to fiscal conditions, Fitch projected that the 2026 budget would increase by 8.1 percent compared to the original 2025 budget, driven by expanded investment in AI, R&D, and high-tech industries, while the fiscal balance was expected to improve to -2.0 percent from -2.3 percent in 2025, supported by higher tax revenues amid an economic recovery. However, Fitch cautioned that a continued rise in government debt, without corresponding gains in potential growth from higher fiscal investment, could weigh on Korea’s sovereign credit rating, particularly given the persistence of fiscal deficits.     Korea’s external position was assessed as robust, underpinned by sustained current account surpluses and its status as a net external creditor, with net foreign assets equivalent to 23.3% of GDP, compared with an average of 17.3% for AA-rated peers. The won, which came under depreciation pressure in 2025 due to capital outflows, including increased investment by Korean residents in US equities, is expected to appreciate moderately over 2026-2027.   Fitch also viewed Korea’s household debt ratio as high relative to advanced economies, but observed that it has been on a gradual downward trend. In this context, the authorities are managing household debt with the medium-term objective of keeping its growth rate below nominal GDP growth.   Concerning risks related North Korea, efforts by the new government to ease tensions on the Korean Peninsula, through enhanced exchanges, normalisation of relations, and denuclearisation, have been acknowledged; however, geopolitical tensions are unlikely to ease in the near term, given North Korea’s limited incentives for dialogue amid strengthened relations with Russia and China.   2. Government’s Assessment and Policy Responses   Through this announcement, Fitch reaffirmed Korea’s sovereign credit rating and outlook (AA- with a stable outlook), expressing continued confidence in the Korean economy. In particular, it reaffirmed its positive assessment of the resolution of political uncertainty following the inauguration of the new government, as well as of Korea’s sound domestic and external fundamentals.   Ahead of Fitch’s latest rating announcement, the government had systematically engaged in the annual consultation process, including a meeting between Deputy Prime Minister Koo Yun Cheol and Fitch’s annual consultation team in December last year, during which the strengths of the Korean economy were actively explained. Going forward, the government will continue to make proactive efforts to maintain Korea’s strong external credit standing by sustaining close communication with global credit rating agencies.                 ※ This document is a summary of Fitch Ratings’ press release provided for media convenience. For full details and exact language, please consult the original Fitch Ratings release available at the link below:     https://www.fitchratings.com/research/sovereigns/fitch-affirms-korea-at-aa-outlook-stable-30-01-2026