![\"A](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/04\/79654640-f896-4d8a-a014-b4836671d3f0.jpg\")
<\/p>\n <\/p>\n
A customer shops at a supermarket in Seoul on April 6. The Iran war has fueled inflationary pressure in Korea, as it heavily relies on the Middle East for crude oil. [NEWS1]<\/p>\n
[BEHIND THE NUMBERS]\u00a0
\n
\n\u00a0
\n
Recent indicators suggest that the Korean economy remains far from stagflation, with stable headline inflation and resilient exports underscoring its relative strength.\u00a0However, for many households, rising living costs, weakening real income and the high youth unemployment rate are creating a growing sense that early warning signs of stagflation are already here.
\n
\u00a0
\n
For one mother, her child\u2019s cram school abruptly began charging a 30,000 won ($20) monthly shuttle fee in March, and
\n\u00a0his\u00a0piano and
\n taekwondo academies raised tuition by 15 percent, citing higher rent. At the same time, she, as a freelance instructor paid per class, has seen fewer bookings as clients also cut back on their own spending, reducing her earnings by almost half compared to the previous year.
\n
\u00a0
\n
\n \u00a0
\n
\u201cI\u2019m working seven days a week to cover living costs, but it still doesn\u2019t feel like enough,\u201d she said.
\n
\u00a0
\n
While financial authorities do not expect stagflation to materialize anytime soon, many households are already feeling its early signs,\u00a0including persistent price increases and sluggish growth.
\n\u00a0To
\n them, solid headline figures offer little comfort; instead, they reflect how economic strength has been concentrated in a narrow set of mainstay industries, such as semiconductors, with limited spillover to the broader economy.
\n
\u00a0
\n
In March, import prices rose by 16.1 percent from the previous month \u2014 the steepest increase since 1998 \u2014 due to a nearly 90 percent increase in crude oil import prices amid the prolonged conflict in the Middle East. The number of employed youth, or those\u00a0aged between 15 and 29, fell\u00a0by 147,000 in March\u00a0from a year earlier, extending a 41-month streak of declines, adding to concerns over weakening growth.
\n
\u00a0
\n
\u201cIf we take into account cost-of-living pressures, this\u00a0is stagflation,\u201d said Kim Sang-bong, an economics professor at Hansung University. \u201cStatistics aren\u2019t capturing reality. Authorities keep saying that inflation is stable, but\u00a0household price pressures remain highly elevated.\u201d\u00a0
\n
\u00a0
\n
In April, the investment banking arm of Paris-based Natixis also flagged mounting risks to the Korean economy, warning that it and other emerging Asian markets could face a \u201cstagflationary environment where central banks will not be able to help.\u201d The concern stems in part from Korea\u2019s heavy dependence on Middle Eastern energy, with roughly 70 percent of its crude oil being imported from the region, as well as the persistently weak won against the dollar.
\n
\u00a0
\n <\/p>\n
![\"\"](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/04\/55fd1bc4-1ec3-4ace-a191-a6728c6e3d44.jpg\")
<\/p>\n
Cost of living races ahead of inflation
\n
As high prices persist, people are cutting costs in their daily spending, most notably by seeking out cheap meals. At an engineering office\u2019s cafeteria in Gangnam District, southern Seoul, for example, the average number of lunchtime diners per\u00a0day\u00a0jumped by nearly 20 percent in March compared to the average number of daily lunchtime diners last year, according to Hyundai Green Food, which operates the cafeteria.
\n
\u00a0
\n
Across convenience store chains, sales of items priced below 1,000 won are also surging. At CU, sales of its private-label products priced under that threshold rose 38 percent last year from the previous year, and the sales of similarly low-priced items at GS25 rose 21 percent over the same period.
\n
\u00a0
\n
The cost pressures leading to these shifts are increasingly affecting service-related prices as well. On-year growth for consumer prices remains in the low 2 percent range \u2014 at 2.2 percent in March \u2014 but prices in the personal services sector, which reflect a wide range of everyday household costs, including dining out, travel and private education, rose 3.2 percent in March compared to the previous year, following a 3.5 percent on-year increase in February.
\n
\u00a0
\n
Households have even begun to cut back on education, a key spending category for many Koreans. Education-related spending fell for four consecutive quarters through the September to December period last year, including a 4 percent on-year decline in the final quarter. \u00a0\u00a0
\n
\u00a0
\n
\u201cIn a stagflationary environment, economic growth and incomes stagnate while prices rise, leading to a decline in consumption,\u201d said Prof. Kim. \u201cAmid rising living costs, there\u2019s little left to spend after covering essential expenses. Even the government\u2019s supplementary budget would do little to revive spending, as consumers would just turn to cheaper products from abroad.\u201d\u00a0
\n
\u00a0
\n
The rising stagflation risks are weighing on Korea\u2019s growth outlook. The Organisation for Economic Cooperation and Development cut Korea\u2019s 2026 growth forecast from 2.1 percent in December 2025 to 1.7 percent in March, citing the energy cost hikes.
\n\u00a0West Texas Intermediate crude, the U.S. benchmark, rose roughly 2 percent to around $96 per barrel on Monday.
\n
\u00a0
\n
In April, the International Monetary Fund (IMF) kept its growth forecast for the country at 1.9 percent for the year, unchanged from January. However, the outlook would have been 0.2 percentage points higher if it weren\u2019t for tensions in the Middle East, said IMF Executive Director Choi Ji-young.\u00a0
\n
\u00a0
\n
\u201cThe key question is how long this uncertainty will persist,\u201d Choi told reporters on April 16, adding that \u201cif international oil prices rise to around $100 per barrel and remain at that level, it would exert significant downward pressure on growth.\u201d
\n
\u00a0
\n <\/p>\n
![\"Job](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/04\/e52664f5-5b91-4814-bb10-83164b8f3351.jpg\")
<\/p>\n
Job seekers look around at a job fair at Kyungpook National University in Daegu on March 31. [NEWS1]<\/p>\n
Stronger shock, but still too early to diagnose
\n
The current economic backdrop is drawing comparisons to the stagflation of the 1970s, a period defined by high inflation, elevated unemployment rates and stagnant growth. The parallel is most often made on the basis that both episodes were triggered by oil crises, including the 1973 Arab oil embargo, which led to a sharp surge in global energy costs and caused stagflation that lasted through 1983.
\n
\u00a0
\n
The emerging stagflation risk linked to today\u2019s Middle East conflict-driven energy shock is seen as potentially more far-reaching than that of the 1970s, with economists pointing to global economic integration.
\n
\u00a0
\n
\u201cThe current situation carries far greater systemic impact than during the 1970s stagflation,\u201d said Prof. Kim Yong-jin, who teaches business at Sogang University. \u201cGlobal supply chains at the time were not as deeply integrated as they are today. Unlike the past, a disruption originating at a single critical node can now propagate rapidly across regions and sectors, amplifying both the scale and speed of transmission in today\u2019s environment.\u201d\u00a0
\n
\u00a0
\n
The impact is reflected in the youth unemployment rate, which remained above 7 percent for the second consecutive month in March at 7.6 percent, following a 7.7 percent growth in February alone, according to government data.\u00a0
\n
\u00a0
\n
Korea\u2019s integration with the global economy is evident in its trade figures, with total trade accounting for 51 percent of its GDP in 1973 and 85 percent in 2024, according to data from the World Bank Group.
\n
\u00a0
\n
However, some caution that it is premature to conclude that Korea has entered a period of stagflation.
\n
\u00a0
\n
\u201cPrices edged up due to higher crude oil costs, but it\u2019s difficult to say the broader economy has entered stagflation,\u201d said Won Chae-hwan, a business professor at Sogang University. \u201cAlthough the initial round of talks has broken down, the United States is unlikely to sustain a prolonged war, given domestic constraints. With the November midterm elections approaching and negotiations with China \u2014 already postponed to May \u2014 on [the United States\u2019] agenda, further delays would carry diplomatic costs.\u201d
\n
\u00a0
\n <\/p>\n
![\"An](\"https:\/\/www.newsbeep.com\/nz\/wp-content\/uploads\/2026\/04\/4b2148d8-2756-4d56-9b89-b96ed0f1f81a.jpg\")
<\/p>\n
An electronic display board celebrates the Kospi\u2019s record-high closing amount of 6,615.03 points, up 2.15 percent from the previous trading session, at Hana Bank\u2019s trading room in central Seoul on April 27. This marks the first time the benchmark index broke past 6,600. [YONHAP]<\/p>\n
\u00a0
\n
Prof. Won added that the strong market performance serves as counterevidence to concerns about stagflation, as it points to \u201cample liquidity.\u201d Korea\u2019s benchmark Kospi hit a fresh all-time high on Monday\u00a0to
\n\u00a06,615.03 points, fully recouping losses incurred after the war broke out in late February. The won has also stabilized to 1,472.5
\n\u00a0per dollar after it persistently broke past the psychological threshold of 1,500 in March.
\n
\u00a0
\n
Some analysts who dispute Korea\u2019s state of stagflation say that subdued growth is not necessarily a concern, given the country\u2019s economic size.
\n
\u00a0
\n
\u201cThe weak growth should be viewed as structural,\u201d said Yoonsoo Lee, a professor at Seoul National University\u2019s Graduate School of International Studies. \u201cIt would be considered a downturn if Korea were expected to grow rapidly, but its potential growth rate is below 2 percent, making it difficult to characterize the current situation as stagflation.\u201d
\n
\u00a0
\n
Against this setting, Prof. Lee said that policy priorities should shift toward boosting productivity and supporting structural adjustment. \u201cThat entails maintaining relatively higher interest rates to facilitate restructuring while providing targeted support to vulnerable groups and struggling sectors rather than relying on broad-based fiscal stimulus.\u201d <\/p>\n