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4mo ago

South Korea Inflation Cools to 1.7% in August on One-Off Telecom Discount

The central bank projects a return to about 2 percent in September, calling the telecom discount temporary.

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Outbound travelers wait in line at an outlet of SK Telecom Co., South Korea's leading mobile carrier, inside Incheon airport, west of Seoul, on May 1, 2025, to have the universal subscriber identity module (USIM) replaced on their smartphones following a network hacking incident involving the potential leak of subscriber information. (Yonhap)
A person walks by an SK Telecom store in Seoul on Aug. 27, 2025. (Yonhap)

Overview

  • Consumer prices rose 1.7 percent year over year in August, the slowest pace in nine months, according to Statistics Korea.
  • Mobile phone fees fell 21 percent after SK Telecom’s 50 percent August bill cut, driving a 3.6 percent drop in public service fees and trimming headline inflation by 0.42 percentage point; without the fee drop, inflation would have been 2.3 percent.
  • Core inflation, excluding food and energy, eased to 1.3 percent from 2.0 percent in July.
  • Food-related pressures persisted as agricultural, livestock and fisheries prices rose 4.8 percent, adding 0.37 percentage point, with bread up 6.5 percent and coffee up 14.6 percent.
  • The Bank of Korea expects inflation to rebound to around 2 percent in September and has lifted its 2025 inflation forecast to 2.0 percent.