East Asia Econ

Korea – why is inflation so high?

GDP growth has been below the BOK's estimate of potential almost continually since 2022. And yet core inflation hasn't dropped below target, and private services inflation – a proxy for domestically generated inflation – has picked up to above 3%. Just what is going on?

Paul Cavey

Apr 9, 2026 • 9 min read

Subscribers Only

East Asia Today

Decent wage growth in Japan in February, but a terrible March EW survey; stupendous current account data in Korea, but continued equity outflows; and inflation falling in March in Taiwan, but underlying core settling at around 2%

Subscribers Only

East Asia Today

In February, despite the strength of consumer confidence, Japanese consumption weakened. That was before the Iran war, and the consequences of the conflict also aren't evident in trade data for the first 20 days of March. They can be seen, however, in the fall in Taiwan's fx reserves last month.

Subscribers Only

East Asia Today

More inflation indicators to report today. China's high-frequency upstream price data continue to point to a YoY rise in PPI in March for the first time since 2022. In Japan, latest data show the output gap (on the BOJ's updated methodology) tightened further in Q425.