Expected Inflation Rate Hits Highest in 9 Years and 7 Months... Interest Rate Level Outlook Index Also Reaches All-Time High

[Asia Economy Reporter Seo So-jeong] The expected inflation rate for the next year, known as the expected inflation rate, reached its highest level in 9 years and 7 months. The interest rate outlook index also hit an all-time high.

According to the 'May Consumer Sentiment Survey' released by the Bank of Korea on the 24th, the expected inflation rate was recorded at 3.3%, the highest since October 2012 (3.3%) in 9 years and 7 months.

The 'price perception' (3.4%), which refers to the consumer price inflation rate subjectively felt by consumers over the past year, recorded its highest level in 9 years and 4 months since January 2013 (3.4%).

The interest rate outlook index (146) rose from 141 in April to 146 in May. This index exceeds 100 when the number of people who expect interest rates to rise in six months is greater than those who expect a decline.

Jonghyun Lee, head of the Bank of Korea's Statistics Survey Team, explained, "Expectations of additional base rate hikes and persistent inflation seem to have influenced consumer perceptions."

The housing price outlook index (111) fell by 3 points in one month. Lee said, "Although nationwide apartment sale prices are stable, the decline is estimated to be due to expectations of increased supply following the temporary exclusion of multi-homeowners from the capital gains tax surcharge," adding, "We need to observe how government policies and regulatory levels will continue to affect the index."

The Consumer Confidence Index (CCSI) for May was 102.6, down 1.2 points from April (103.8), marking a decline for the first time in three months.