The Bank of Korea(BOK) has raised concerns that the high cost of essentials such as food, clothing and housing is dampening consumer spending and hindering an economic recovery.

In a report released Wednesday, the BOK said South Korea’s cost of living significantly surpasses the OECD average, with prices for items like fruit and meat over 50 percent higher.

From 2021 to the first quarter of 2025, real household purchasing power rose just two-point-two percent, down from three-point-four percent pre-pandemic, while 62 percent of surveyed consumers cited diminished purchasing power as the main reason for curbing spending.

The BOK attributed the spike to pandemic-era supply chain disruptions, the Russia-Ukraine war, extreme weather, and, more recently, rising import prices and a weaker won driving up processed food costs.

It warned that persistently high living costs could raise inflation expectations and undermine long-term price stability, urging stronger market competition, diversified import sources, and temporary tariff cuts to help stabilize food prices and ease burdens on low-income households.