South Korea Headline Inflation Drops to 2.8 , Below Consensus

Economics Research 4 August 2026 | 9:29AM KST

South Korea: Headline Inflation Drops to 2.8%, Below Consensus

Bottom line: Irene Choi | Goldman Sachs (Asia) L.L.C., Seoul South Korea’s headline CPI inflation dropped to 2.8% yoy in July, from 3.2% the prior Branch

month, in line with our below-consensus forecast. Sequential momentum dropped to Goohoon Kwon, CFA | -0.2% mom sa from +0.3% the prior month, due to the 0.6% decline in prices of Goldman Sachs (Asia) L.L.C. goods. Prices of services rose 0.2% after staying flat the prior month. Core CPI (excluding food and energy) inched up to 2.6% yoy from 2.5% the previous month, on a pickup in sequential momentum to 0.3% mom sa.

July headline inflation: 2.8% yoy (-0.2% mom sa); Bloomberg consensus: 2.9% yoy; GS forecast: 2.8% yoy; Previous: 3.2% yoy (+0.3% mom sa).

July core inflation (excluding food and energy): 2.6% yoy (+0.3% mom sa); Previous: 2.5% yoy (+0.1% mom sa).

1. South Korea’s headline CPI inflation dropped to 2.8% yoy in July, down from 3.2% the prior month (Exhibit 1). This was slightly below the Bloomberg consensus of 2.9%, and the first time it has fallen below consensus estimates since April, but was in line with our forecast. 2. Sequential momentum dropped to -0.2% mom sa (seasonally adjusted by GS) from +0.3% the prior month, recording the first negative momentum since August 2025 (Exhibit 2). Prices of goods dropped 0.6% mom sa, falling for the first time since February, on declines in prices of agricultural goods (-1.6%) as well as industrial goods (-0.3%). For the latter, modest gains in prices of processed food and durable goods were more than offset by the 7.9% decline in prices of oil products, which in turn reflects government measures to accelerate downward price adjustments. 3. Prices of services rose 0.3% mom sa after staying almost flat the prior month. Prices of eating out rose at a stable pace of 0.2%, whereas prices of other personal services, including accommodation services, rebounded by 0.3% after a slight pullback the prior month. Cost of public services rose 0.2%, with momentum almost unchanged from the previous month, while cost of housing accelerated marginally to 0.2% from 0.1% the prior month. 4. Core CPI momentum accelerated slightly to 0.3% mom sa from 0.2% the prior month, in light of the rebound in cost of services. In year-on-year terms, core CPI

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inflation inched up to 2.6% yoy from 2.5% the prior month.

Exhibit 1: Headline year-on-year inflation was down to 2.8% in July, while core inflation inched up to 2.6% Percent change, yoy Percent change, yoy 7 7 Korea's inflation vs. BOK target range

Core CPI (ex food and energy) 5 5 BOK inflation target

Note: Shaded area denotes inflation target range (on core inflation before 2007; headline afterwards)

Source: Korea Statistics Office

Exhibit 2: Headline CPI was down in July

Percent change, mom sa Percent change, mom sa 1.4 1.4 Korea inflation 1.2 1.2 Headline Core ex food and energy 1.0 1.0

-0.6 -0.6 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24 Jan-25 Jul-25 Jan-26 Jul-26

Source: Korea Statistics Office