South Korea Extends Fuel Tax Cuts Through September 30, Oil Price Cap Reduced Inflation by 0.7pp in H1

According to the Ministry of Economy and Finance, South Korea on July 24 extended fuel tax reductions through September 30, maintaining cuts of 15% for gasoline and 25% for diesel and propane. The measure reduces per-liter costs by 122 won for gasoline, 145 won for diesel, and 51 won for propane compared to pre-cut levels.

The government's oil price cap policy, implemented during Middle East tensions, lowered consumer price inflation by 0.7 percentage points from March to June 2026, preventing CPI growth from reaching 3.5% (actual rate was 2.8%). The government also adjusted supply regulations, relaxing storage limits on syringes and needles while extending urea solution hoarding bans through August.