[Graphics by Song Ji-yoon]
South Korea’s consumer sentiment stayed positive in November as the country returns to near normalcy despite still-furious virus outbreak and stronger expectations for higher interest rates and inflation
According to data released by the Bank of Korea (BOK) on Tuesday, the composite sentiment index (CCSI) stood at 107.6 in November, up 0.8 point from a month ago. The index has been inching up for three straight months from 103.8 in September and 106.8 in October.
A reading above 100 means that people are more optimistic than pessimistic about the economy while vice versa for a reading below 100.
Of six major indicators that make up the CCSI, the index for prospective household spending and current domestic economic conditions rose 3 points and 1 point, respectively, in November versus October, mainly contributing to the gain in CCSI.
Prospective domestic economic conditions, prospective household income, and current living standards remained unchanged at each 96, 101, and 92, while prospective living standards fell 1 point to 97.
The BOK noted that the rise in overall consumer sentiment index is mainly driven by the improvement in prospective household spending index on high expectations for a gradual return to normal life under the government’s “living with Covid-19” scheme.
Consumer confidence gains however have been weighed down by inflation concerns.
Prospective employment opportunities, although not included as CCSI indicator, rose 4 points to 98, while the BOK’s prospective interest rates index rose 5 points to 138 in November on growing expectations for an additional rate hike and inflation concerns. It is the highest figure in nearly 11 years since March 2011.
Consumers’ expected inflation for the following year rose 0.3 percentage point each to 2.7 percent. The rise in expected inflation is the fastest since 0.3 percentage point in January 2017.
Prospective housing prices, however, fell 9 points to 116 in November amid the government’s tighter regulations to curb runway housing prices.
By Lee Eun-joo
[ⓒ Pulse by Maeil Business Newspaper & mk.co.kr, All rights reserved]