Korean consumer sentiment dips on delayed economic recovery, high inflation

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Consumer sentiment in South Korea turned pessimistic again after four months, as expectations of economic recovery wane and inflation remains persistently high. On the other hand, there are expectations that housing prices will rise further on the back of a rebound in home prices.

The Bank of Korea (BOK) announced Tuesday that the composite consumer sentiment index (CCSI) for September stood at 99.7, down 3.4 points from a month earlier. The CCSI is a comprehensive indicator that reflects consumers’ assessments of the economic situation, including their perceived economic conditions, economic outlook, living conditions, and income prospects, with a score above 100 indicating optimism and a score below 100 indicating pessimism.

This is the first time in four months that the CCSI has fallen below the 100-mark since May 2023, when the figure was 98. The BOK explained that concerns about sluggish exports due to the delayed global economic recovery and shrinking spending power as inflation rises contributed to the decline.

Of the six sub-indices that make up the CCSI, current economic assessment (66) and economic outlook (74) both saw sharp declines of 6 points from the previous month. Prospects for living conditions and current living conditions also declined by 3 points and 2 points respectively, with scores of 92 and 89. Expectations for household income fell by 1 point to 99, falling below 100.

Expectations for a rebound in housing prices, however, have shown a continuous upward trend as the housing price outlook rose by 3 points to 110. This figure measures the estimated rinse in home prices for the year ahead and has been on the rise for 10 consecutive months.