Export Slump and Rising Perceived Inflation Lead to Pessimistic Consumer Sentiment... Housing Outlook Hits Highest in 1 Year 4 Months

Bank of Korea, 'September Consumer Sentiment Survey'
Consumer Sentiment Index Falls Below 100 for the First Time in 4 Months

Due to sluggish exports caused by the delayed global economic recovery and rising perceived inflation, the Consumer Sentiment Index (CSI) in September fell below the baseline value of 100 for the first time in four months, turning pessimistic. On the other hand, the Housing Price Expectation Index continued its upward trend for the tenth consecutive month, reaching its highest level in 1 year and 4 months as the rise in housing transaction prices persisted and expectations for housing price recovery grew.

According to the "September Consumer Survey Results" released by the Bank of Korea on the 26th, the Consumer Sentiment Index (CCSI) for this month was 99.7, down 3.4 points from the previous month, marking a decline for two consecutive months. The Consumer Sentiment Index, which had shown an upward trend for five consecutive months since March, exceeded 100 for the first time in 13 months in June and remained above 100 for three months until last month, but fell below 100 this month due to the delayed global economic recovery, including in China.

The CCSI is an indicator calculated using six of the 15 indices that make up the Consumer Survey Index (CSI): current living conditions, expected living conditions, expected household income, expected consumption expenditure, current economic judgment, and future economic outlook. A value above 100 indicates optimistic consumer sentiment compared to the long-term average (2003?2022), while a value below 100 indicates pessimism.

Hwang Hee-jin, head of the Bank of Korea's Statistics Survey Team, explained, "Consumer sentiment appears to have contracted due to growing concerns over sluggish exports amid a slower-than-expected global economic recovery and rising perceived inflation caused by increases in international oil and agricultural product prices."

This month, the Housing Price Expectation Index rose 3 points to 110 compared to 107 last month. This is the highest level in 1 year and 4 months since May last year (111). A Housing Price Expectation Index above 100 means that more consumers expect housing prices to rise than to fall. This index has shown an upward trend for 10 consecutive months.

Team leader Hwang said, "The Housing Price Expectation Index rose by 3 points as the recent rise in housing transaction prices continued and expectations for housing price recovery increased. Although this seems to mark the beginning of an upward trend, since the interest rate level expectation remains at last month's level and there are related variables, it is necessary to observe whether the upward trend will continue."

The Interest Rate Level Expectation Index (118) remained at last month's level due to the maintenance of a tightening stance following a rebound in inflation and the continued high levels of market interest rates, including loan interest rates.

The Inflation Level Expectation Index (147) remained at a high level similar to the previous month as the rise in processed food and dining-out service prices slowed, but the reduction in the decline of petroleum prices due to rising international oil prices and the increase in agricultural product prices pushed the consumer price inflation rate back into the 3% range.

Inflation perception fell by 0.1 percentage points to 4.1%, while the expected inflation rate remained unchanged at 3.3% from the previous month.

The Employment Opportunity Expectation Index (77) dropped 7 points as the total number of employed persons increased, but employment among youth and in the manufacturing sector continued to decline.