Bank of Korea Releases July Consumer Sentiment Survey Results
Housing Price Outlook Surpasses 100
Expected Inflation Hits Lowest in 14 Months
With the increase in housing transactions, the outlook that house prices will rise in the future has become dominant.
According to the 'July Consumer Sentiment Survey Results' announced by the Bank of Korea on the 26th, the Housing Price Outlook Consumer Sentiment Index (CSI) recorded 102 this month. The Housing Price Outlook CSI has risen every month since hitting a low of 61 in November last year and reached the baseline of 100 last month. The index exceeds 100 when many people expect house prices to rise in one year.
Hwang Hee-jin, head of the Bank of Korea's Statistics and Survey Team, explained, "The index rose by 2 points as expectations for a housing market recovery were reflected, with nationwide housing transaction volumes increasing and the slowdown in the decline of prices continuing." Regarding the outlook, he said, "There are still regional differences, and since loan interest rates are also rising, it remains to be seen whether the overall upward trend will continue."
The Consumer Confidence Index (CCSI), which comprehensively reflects consumers' sentiment about the economic situation, also rose by 2.5 points from the previous month to 103.2, exceeding 100 for the second consecutive month. A figure above 100 means consumer sentiment is optimistic compared to the long-term average (2003?2021), while below 100 indicates pessimism. Team leader Hwang explained, "This is due to the continued slowdown in inflation, a moderate recovery in consumption, and expectations of easing export sluggishness."
The Price Level Outlook CSI (144) fell by 2 points. Although the increase in public utility charges has expanded and the perceived prices of processed foods and dining-out services remain high, the consumer price inflation rate has entered the 2% range due to a significant drop in petroleum prices.
Among the six indices that make up the Consumer Confidence Index, all rose except for the Consumer Spending Outlook CSI (113), which remained the same as the previous month. Compared to June, the Current Economic Conditions CSI (75) and Future Economic Outlook CSI (84) rose by 6 points each, the Living Conditions Outlook CSI (94) and Household Income Outlook CSI (99) rose by 1 point each, and the Current Living Conditions CSI (91) rose by 2 points.
The expected inflation rate, which indicates the anticipated consumer price inflation over the next year, continued its downward trend, falling by 0.2 percentage points from the previous month to 3.3%, marking the lowest level in 14 months. Team leader Hwang said the decline was mainly influenced by "the drop in oil prices and the base effect from last year, which brought the consumer price index down to the 2% range," but added, "Since public utility fee hikes are expected in the second half of the year and heavy rains may cause agricultural product prices to rise, it remains to be seen whether this trend will continue."
The Interest Rate Level Outlook CSI (112) rose by 7 points, as despite the Bank of Korea's four consecutive rate freezes, the possibility of additional rate hikes in the United States and the upward trend in market interest rates are expected to keep interest rates at a high level.
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