Updated : 2026-04-03 22:58:15 KST
Title: March's inflation rate at 2.2% driven by petroleum products rising 9.9% on-year due to Middle East Surging global oil prices are fueling inflation in South Korea, with consumer prices rising 2-point-2 percent in March, driven largely by petroleum costs. Let’s take a closer look at what’s behind the increase. South Korea's consumer price growth accelerated to 2.2 percent in March, driven almost entirely by a massive spike in global oil prices.
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According to the Ministry of Data and Statistics on Thursday, the overall inflation rate was heavily pressured by the energy sector. Petroleum product prices surged 9.9 percent from a year ago marking the fastest rise since October 2022 when oil prices rose during the war in Ukraine. "The biggest factor is the rise in global oil prices due to the situation in the Middle East. Dubai crude soared to 128 dollars in March, from 68 dollars four cents the month before. This seems to have significantly driven up our domestic fuel costs."
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This near 10-percent jump in petroleum prices marks a sharp reversal from the previous month. In February, fuel prices had actually declined by 2.4 percent on-year. But with food prices going up, the overall index was around the same level at 2.0%. Now for this month, breaking down the energy shock, the impact was most severe in diesel. Diesel prices jumped 17 percent due to its broad use across industrial, transport, and military sectors, while gasoline rose 8 percent. Despite this severe external shock, the headline inflation rate was kept from spiraling further.
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headline inflation rate 식품·에너지 등 변동성이 큰 품목을 포함한 전반적 물가 상승률
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The government's price ceilings on fuel products effectively mitigated the spike, keeping South Korea's figures lower than those of other major economies. The energy price surge was also offset by a decline in food costs a reversal of the factors from the previous month. Overall, agricultural, livestock, and fishery prices fell 0.6 percent. The fresh food index saw a steeper drop of 6.6 percent, as warmer spring weather boosted crop production. Additionally, processed food inflation slowed following factory price cuts for staple ingredients like flour and sugar.
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Looking ahead, the ministry warns that upward pressure is expected to persist into April, as higher energy costs will inevitably reflect in international airfare and imported agricultural goods.
Title: Inflation breakdown: will the oil prices go back to pre-Epic Fury if situation improves? And now, our economics correspondent Kim Do-yeon joins us in the studio to discuss this further. Welcome Do-yeon. Good to be here.
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1. You mentioned the price hike of petroleum products was mitigated by the government's price cap. How did Korea fare compared to other nations? Good evening. The Ministry of Data and Statistics emphasized that the domestic fuel price surge was contained thanks to the government's price ceiling, which is currently capped at 1,934 won per liter for refiners, before it's transferred to retailers.
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"While we are the first to release detailed March figures, looking broadly, the margin of increase is significantly slower compared to countries like the U.S. or Japan. This effect appears to be largely due to the implementation of the price ceiling." To be specific, the U.S. national average for regular gasoline just topped four dollars a gallon for the first time in nearly four years—jumping over a dollar per gallon since the conflict began. U.S. diesel has also surged by roughly one dollar and seventy cents. Officials confirmed the domestic price ceilings prevented a similar steep spike here.
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2. The biggest question on everyone's mind is the Middle East conflict. Will global oil prices stabilize anytime soon? The outlook is grim. A new report by the Korea Institute for International Economic Policy, or "Ki-ep," concludes that oil prices will not return to pre-war levels under any foreseeable scenario. "For example, even in an early ceasefire scenario, it would be ninety dollars by the fourth quarter of 2027.
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The biggest reason is that supply cannot be rapidly increased. Even if the U.S. eases sanctions on Russia or tries to increase its own production, practically, it is difficult to sharply increase output in a short period." If the current blockade of the Strait of Hormuz continues, prices could stabilize at a much higher one hundred and seventeen dollars. Repairing damaged Middle Eastern energy facilities will take three to five years. And even if the Strait reopens, potential Iranian transit fees will likely be passed down to consumers.
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3. That doesn't sound promising. What exactly can we expect for April and beyond? Is this just about expensive airfares and groceries? It goes much deeper. As I said before, while consumers will feel the immediate pinch in airfares and imported food this month, a massive crisis is brewing in our core industries. The conflict has severely disrupted the supply of naphtha and LNG. Following the attack on Qatar's gas complex, global naphtha prices have skyrocketed by nearly fifty percent.
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South Korea relies on the Middle East for over thirty-four percent of its naphtha—the absolute backbone of our petrochemical industry. Furthermore, Qatar is a major producer of helium, a critical component for semiconductor manufacturing. This energy shock is transforming into a severe supply chain crisis for our biggest export sectors. Thanks for the coverage. Anytime.
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