Korea's consumer sentiment rebounds despite 4th wave of Covid-19

[Photo by Han Joo-hyung]

South Korea’s consumer sentiment recovered in September after two-month deterioration as consumers shrugged off the worst Covid-19 outbreak in the country on a surge in vaccination rates and strong exports.

According to Bank of Korea data on Tuesday, the composite consumer sentiment index (CCSI) reached 103.8 in September, up 1.3 points from a month earlier after two months of declines in July (103.2) and August (102.5).

A reading above 100 means that people are more optimistic than pessimistic about the economy while vice versa for a reading below 100.

The BOK noted that despite the worst outbreak of coronavirus from Delta variant infections, consumer sentiment stayed positive as consumers have adapted to the prolonged Covid-19 environment and bet on a slowdown in infections from the rapidly rising vaccination rates in the country. They also regained confidence about the economy thanks to the country’s still strong export results, according to the central bank.

Three out of six major indicators that make up the CCSI rose in September from a month earlier – prospective domestic economic conditions were up 4 points to 94, prospective household spending up 2 points to 109, and current domestic economic conditions up 1 point to 78. Other indicators prospective living standards, current living standards, and prospective household income remained unchanged.

Prospective employment opportunities, although not included as CCSI indicator, rose 2 points to 88, data showed.

In the consumer survey, the BOK’s prospective interest rates index rose 8 points to 134 in September after the central bank raised its benchmark interest rate to 0.75 percent for the first time in 15 months in August from 0.5 percent.

Prospective housing prices index, however, fell 1 point to 128 in September from the previous month, data showed. The BOK noted consumers seemed to have felt housing prices might have peaked.

The prospective prices index and prospective household debt index remained unchanged at 149 and 99, respectively, in September. Consumers’ perceived inflation over the past one year remained unchanged at 2.4 percent and expected inflation for the following year also unchanged at 2.4 percent.

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