Consumer sentiment in August fell for the first time in four months amid sluggish stock markets and rising prices. The Bank of Korea said on Friday that its consumer sentiment index for August came in at 86.1, down 1.1 points from July's 87.2. This was the first on-month decline since April. The August figure is still 9.6 points below the long-term average of 95.7. The bank conducts a monthly survey of 2,000 households to compile the index. The fall in consumer sentiment was led by a slump in stock markets and a rise in prices. The sub-index for current economic conditions fell 2.3 points to 63.8, and the index for future economic conditions dropped 1.6 points to 67.6. The index measuring inflation expectations over the next one year rose 0.2 points to 2.7. The Bank of Korea said it will continue to monitor how the Russia-Ukraine conflict and other external factors affect consumer sentiment. The central bank noted that the August decline was not dramatic, adding that consumer sentiment was still recovering. The government also said it will introduce measures to stabilise food prices and help with people's living costs. The Ministry of Economy and Finance said it will discuss measures with relevant ministries and announce them soon. President Yoon Suk-yeol on Friday met with his economic aides and ordered them to come up with measures to stabilise food prices. He instructed them to focus on stabilising prices of agricultural products and minimising the impact on people's daily lives. The president also called for a thorough response to typhoon damage. Typhoon Hinnamnor made landfall on Thursday, bringing strong winds and rain to the southeast. The government has set up an emergency response team and ordered the mobilisation of all available resources to minimise damage.
Korean stock markets struggled and consumer sentiment fell for the first time in four months due to rising prices and a slowdown in the real estate market in August, according to a survey released by the Bank of Korea. Housing price expectations, which had been on an upward trend since April, dipped slightly in August. The Consumer Confidence Index (CCSI) dropped to 104.5 from the previous score, a decrease of 2.3 points.
Bank of Korea official explained that despite favorable economic flows, the decline in consumer sentiment was due to concerns about the domestic market, accumulated price hikes, and the adjustment of domestic stocks. The index measures the current and future outlook of the economy in six key areas, with a score above 100 indicating a more optimistic view than the long-term average (2003-2025).
The current living standards index, which reflects the impact of falling stock prices, fell by one point to 92 from the previous score. The employment outlook index, which accounts for job opportunities, particularly in AI-related industries, saw a further decline of three points, reflecting ongoing youth unemployment issues. The housing price outlook index fell by two points, largely due to the impact of the revised tax system and housing supply measures.
The inflation outlook is expected to remain high at 2.7% for the next year, driven by ongoing geopolitical tensions, rising interest rates, and a weakening of the won against the dollar.
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