South Korea’s annual inflation rate remained at 2% in February 2026, unchanged from January and slightly below market expectations of 2.1%. This reading is in line with the central bank’s target, suggesting that overall price pressures were largely contained before the Iran conflict sparked renewed volatility in global energy markets.
The escalating conflict in the Middle East has unsettled financial markets and driven energy prices sharply higher, heightening inflation risks and forcing policymakers to reassess their outlooks. South Korea is especially exposed to such shocks because it depends heavily on crude oil and natural gas imports from the region.
Last week, the Bank of Korea kept its policy rate unchanged at 2.5% for the sixth consecutive meeting and raised its inflation forecast for this year to 2.2%, up from its previous projection of 2.1%. On a monthly basis, consumer prices rose 0.3% in February, slowing from a 0.4% increase in January, which had also been the consensus forecast.
