South Korea's living costs significantly above OECD average

IANS June 18, 2025 298 views

South Korea's food, clothing, and housing costs far exceed OECD averages according to the Bank of Korea. Pandemic disruptions, supply chain issues, and the Ukraine war drove prices 19.1% higher since 2021. The weak won and rising import costs continue pushing up processed food prices. The central bank warns sustained high living costs may destabilize long-term inflation expectations.

"Rising living costs could undermine price stability long-term if households' inflation expectations rise" — Bank of Korea report
Seoul, June 18: Essential living costs in South Korea are significantly higher than those in other major nations, hindering the recovery of consumer spending, the central bank said on Wednesday.

Key Points

1

Food prices 1.5x higher than OECD average

2

Cumulative essential item costs rose 19.1% since 2021

3

Weak won and import costs fuel processed food inflation

4

BOK warns of prolonged consumer spending slump

South Korea's price indices for food, clothing and housing stood at 151, 161 and 123, respectively, based on the average price level of Organization for Economic Cooperation and Development (OECD) member countries set at 100, according to a report from the Bank of Korea (BOK), reports Yonhap news agency.

The BOK also cited 2023 data from the Britain-based economic analysis firm Economist Intelligence Unit (EIU), which showed that prices for fruits, vegetables and meat in South Korea were more than 1.5 times higher than the OECD average.

The cumulative increase in the prices of essential items from January 2021 through May 2025 stood at 19.1 percent, which is 3.2 percentage points higher than the country's overall consumer price increase at 15.9 percent.

This growth was driven by high inflationary pressures during the COVID-19 pandemic, supply chain disruptions, the Russia-Ukraine war and adverse weather conditions, among other factors, which contributed to significant rises in food and energy prices.

More recently, rising import costs for raw materials and a weaker Korean won have also been reflected in the prices of processed foods, the BOK said.

"If rising living costs continue to increase households' perceived inflation levels, it could affect their inflation expectations and undermine price stability over a longer-term perspective," the report stated.

"It is crucial to ease regulations and reduce market entry barriers to foster competition among companies, as well as to diversify import sources of raw materials to mitigate the spillover effects of price shocks from specific items to others," it added.

The BOK expected consumer prices and core inflation rates to stabilize in the 1 percent range during the second half of this year, but it highlighted uncertainties related to the United States' tariff policies and rising global oil prices amid geopolitical tensions in the Middle East.

The central bank forecast consumer prices to increase by 1.9 percent this year and 1.8 percent in 2026.

Reader Comments

R
Rahul K.
This is surprising! South Korea is known for its economic growth, but such high living costs must be tough for ordinary citizens. In India, we're also facing inflation but our price indices are much lower comparatively. Hope both our countries find solutions soon. 🇮🇳🤝🇰🇷
P
Priya M.
The food prices being 1.5x OECD average is shocking! I visited Seoul last year and noticed how expensive groceries were compared to India. Their minimum wages are higher but this still creates pressure. Maybe India can learn from their challenges as we develop further.
A
Arjun S.
Interesting analysis. While South Korea faces these challenges, we should note their per capita income is much higher than India's. Their problem is relative cost, while ours is absolute affordability. Both need different policy approaches.
N
Neha P.
The report mentions diversifying import sources - this is crucial for India too! We're too dependent on certain countries for essentials. South Korea's situation shows how global events can hit home budgets hard. Time for more self-reliance in agriculture maybe?
V
Vikram J.
Their housing index at 123 vs OECD average of 100 makes me feel better about Indian real estate prices! Though quality of life differs, this shows developed nations have their own cost of living struggles. Maybe our middle class isn't doing so bad after all.
S
Sonia R.
The cumulative 19.1% price increase since 2021 is concerning. We've seen similar trends in India post-pandemic. This global inflation wave affects everyone. Hope South Korea's solutions work - we might need to adopt similar measures if things don't improve here.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Your email won't be published


Disclaimer: Comments here reflect the author's views alone. Insulting or using offensive language against individuals, communities, religion, or the nation is illegal.

Tags:
South Korea inflation OECD living costs Bank of Korea consumer prices Korean won