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South Korea Freezes Fuel Price Caps as Inflation Reaccelerates to 2.6%

Central bank officials now float rate hikes next as oil costs threaten to push May inflation toward 3%.

A man fills up a gas can at a gas station in Seoul, South Korea, March 9, 2026. REUTERS/Kim Hong-Ji
Image
A man refuels his vehicle at a gas station in Seoul on May 7, 2026. (Yonhap)
Gasoline and diesel fuel prices are displayed at a gas station in Seoul on May 5, 2026. The average gasoline price in the country came to 2,008.6 won per liter as of May 2, according to data from the Korea National Oil Corp. (Yonhap)

Overview

  • Price ceilings on gasoline, diesel and kerosene were kept unchanged for a third straight two‑week period Thursday to ease living costs and blunt price pressures.
  • Government data released Wednesday showed headline inflation rose 2.6% in April, the fastest in 21 months, led by a 21.9% jump in petroleum prices with diesel up 30.8% and gasoline up 21.1%.
  • International airfares surged 15.9% in April and core inflation reached 2.2%, signaling that higher fuel costs are spilling into travel and services.
  • Bank of Korea leaders warn May inflation could approach 3% and say it may be time to consider raising interest rates, with the next policy meeting set for May 28.
  • Finance officials estimate fuel caps and tax relief shaved 1.2 percentage points off April inflation, softening the blow for truckers, couriers, farmers and other heavy fuel users.