November BOK Consumer Sentiment Index Falls 1 Point from Previous Month
Concerns Over Exchange Rate Rise, Stock Price Drop, and Export Slowdown Following Trump's Election
With the victory of former U.S. President Donald Trump in the presidential election, uncertainty about the domestic economy has increased, causing the consumer sentiment index in November to turn downward. As the nationwide housing price increase slowed, consumers' sentiment about rising house prices also declined for the second consecutive month.
According to the "November Consumer Survey Results" announced by the Bank of Korea on the 26th, the Consumer Sentiment Index (CCSI) for this month was 100.7, down 1.0 point from the previous month.
The CCSI is a sentiment indicator calculated using six major indices that make up the Consumer Sentiment Index (CSI). A value above the long-term average of 100 indicates optimistic consumer sentiment, while a value below 100 indicates pessimism.
The CCSI rebounded to 101.7 last month due to expectations of economic improvement following the base interest rate cut and price stabilization, marking a recovery after three months, but it turned downward again after just one month.
Among the major indices that make up the CCSI, the Future Economic Outlook CSI led the overall decline by dropping 7 points from 81 last month to 74 this month. This 7-point drop in the Future Economic Outlook CSI is the largest decline in two years and four months since July 2022.
In addition to the Future Economic Outlook CSI, the Current Economic Conditions CSI and Living Conditions Outlook CSI also slightly declined this month, contributing to the fall in the CCSI.
The Bank of Korea explained that the increase in uncertainty following the U.S. presidential election results and the slowdown in export growth had an impact. The election of former President Donald Trump reflected concerns about tariff increases in the index.
Hwang Hee-jin, head of the Statistical Survey Team at the Bank of Korea’s Economic Statistics Bureau, said, "After the U.S. presidential election results were announced, our stock market declined and the won-dollar exchange rate rose sharply, negatively affecting the index," adding, "Concerns arose that protectionism would strengthen following the U.S. election results and that South Korea’s export growth might slow."
As the nationwide apartment price increase slowed, expectations for rising house prices fell for the second consecutive month. The November Housing Price Outlook CSI was 109, down 7 points from the previous month. This marks two consecutive months of decline and is the largest drop in 11 months since December last year. Team leader Hwang explained, "The November Housing Price Outlook CSI fell sharply due to strengthened household loan management, a decrease in apartment sales, and a slowdown in the rise of sales prices."
The November Interest Rate Level Outlook CSI rose 5 points from the previous month to 93. This was influenced by rising U.S. market interest rates and increased bank interest rates due to strengthened household loan management.
The expected inflation rate for the next year remained unchanged at 2.8% from the previous month. Despite the slowdown in consumer price increases, concerns about rising import prices due to the sharp rise in exchange rates kept the figure steady. The expected inflation rate three years from now fell 0.1 percentage points to 2.6% compared to the previous month, while the expected inflation rate five years from now remained unchanged at 2.6%.
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
