Bank of Korea Announces November Consumer Sentiment Survey
Expected Inflation Drops 0.1%p Amid Interest Rate Hikes
Apartment Price Decline Dampens Buying Sentiment
View of downtown apartments from ASEM Tower in Samseong-dong, Gangnam-gu, Seoul [Image source=Yonhap News]
Due to continued interest rate hikes and growing concerns over economic slowdown, the expected inflation rate (the anticipated consumer price increase over the next year) turned downward after a month. Housing price expectations recorded the lowest level in history for the fifth consecutive month as the decline in apartment prices continued to deepen.
According to the 'November Consumer Sentiment Survey' released by the Bank of Korea on the 22nd, the expected inflation rate was recorded at 4.2%, down 0.1 percentage points from 4.3% in October. The expected inflation rate, which is the forecasted consumer price increase over the next year, hit a record high of 4.7% in July, then fell for two consecutive months in August (4.3%) and September (4.2%), rose again in October (4.3%), but dropped once more after a month.
The overall Consumer Confidence Index (CCSI) for November was 86.5, down 2.3 points from 88.8 in October. The CCSI is an indicator calculated using six major individual indices out of the 15 indices that make up the Consumer Sentiment Index (CSI): current living conditions, expected living conditions, expected household income, expected consumption expenditure, current economic conditions, and expected economic conditions.
A figure above 100 indicates optimistic consumer sentiment compared to the long-term average (2003?2021), while a figure below 100 indicates pessimism. Hwang Hee-jin, head of the Bank of Korea’s statistics survey team, explained, "The index fell compared to the previous month due to ongoing high inflation rates and concerns over economic slowdown, as exports showed sluggish performance."
The housing price expectation index was 61, down 3 points from the previous month, marking the lowest record for five consecutive months. This is interpreted as a significant contraction in buying sentiment due to the widening decline in apartment sale prices.
The interest rate level expectation index was recorded at 151, rising by 1 point in a month. If more respondents expect the interest rate six months from now to be higher than the current rate, the index exceeds 100.
The current economic conditions index (46) and the expected economic conditions index (54) fell by 1 point and 2 points respectively compared to the previous month, indicating that many expect the economy to slow down in the future.
The employment opportunity expectation index was 66, down 4 points from the previous month. Team leader Hwang said, "Although employment indicators are showing a favorable trend, the index declined due to increased uncertainty about the economic outlook."
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