Import prices surge, signaling long inflation battle

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Import prices surge, signaling long inflation battle

Published: 16 Apr. 2026, 00:00

Audio report: written by reporters, read by AI

Shin Hyun-song, nominee for Bank of Korea governor, answers lawmakers’ questions during a confirmation hearing at the National Assembly’s Strategy and Finance Committee in Yeouido, Yeongdeungpo District, western Seoul on April 15. [YONHAP]

A sharp rise in import prices following the Iran war is raising concerns that Korea is entering a prolonged period of elevated inflation.

According to the Bank of Korea, import prices in March rose 16.1 percent from the previous month, the highest increase since January 1998, during the Asian financial crisis. The surge reflects a simultaneous jump in global oil prices and the dollar-won exchange rate. Crude oil prices alone climbed 88.5 percent from February, marking the steepest on-month rise since January 1974 during the first oil shock. Prices of intermediate goods such as naphtha also rose sharply.

The increase in import prices is expected to feed into producer and consumer prices after a short lag, suggesting that the inflationary impact is only beginning. The International Monetary Fund has already revised its inflation outlook for Korea this year to 2.5 percent, up from 1.8 percent projected in November of last year.

Shin Hyun-song, nominee for governor of the Bank of Korea, warned during a parliamentary hearing that inflationary pressures could persist if tensions in the Middle East are not resolved quickly. At the same time, he assessed that the likelihood of stagflation in Korea remains relatively low.

Still, the risk cannot be dismissed. Rising prices are likely to erode household purchasing power, potentially dampening consumption and slowing economic growth. Inflation driven by supply shocks also limits the effectiveness of conventional policy responses. Raising interest rates is unlikely to address the root cause, while a supplementary budget recently approved by the National Assembly, totaling 26 trillion won ($17.6 billion), could add to price pressures by increasing liquidity.

In the short term, stabilizing the supply of energy and raw materials is critical. Efforts such as securing crude oil imports from countries in the Middle East are expected to help ease supply constraints, but further measures may be needed to mitigate volatility.

A swift resolution to the inflationary shock appears unlikely. Damage to oil and gas infrastructure from the conflict will take time to repair, suggesting that high prices could persist. As a result, the burden on households is expected to grow.

Under these conditions, policy responses require careful balance. While targeted support for vulnerable groups is necessary, broad stimulus measures aimed at boosting consumption risk exacerbating inflation. Authorities should instead prepare for a sustained period of price pressure and focus on maintaining fiscal discipline. The challenge ahead is not a short-term spike but a longer-term adjustment to a higher price environment.

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.