[Photo by Park Hyung-ki]
Adding to the rationale behind moderating the pace of rate increases, South Korean consumer expectations for inflation gains in the following year has plateaued in November on softer grocery and fuel prices, while consumer sentiment worsened from high rates and housing market slump.
According to the Bank of Korea (BOK) Consumer Survey for November released Tuesday, consumers’ expected inflation for the following year came to 4.2 percent, inching down from 4.3 percent in October. The figure has swaying slightly up and down after hitting a historic high of 4.7 percent in July. Consumers’ expected inflation in August came to 4.3 percent, 4.2 percent in September, and 4.3 percent in October.
“Prices, including utility fees and dining out costs, still remain high but prices of oil and agricultural, livestock, and fisheries products stabilized, helping to ease expected inflation,” said Hwang Hee-jin, an official from the BOK. “A decline in the upward trend in U.S. consumer prices would have also affected the sentiment.”
The survey was conducted on 2,500 households between November 8 and 15.
Expectations for interest rates going higher went up by 1 point from the previous month to 151 in November. A reading above 100 means that there are more people anticipating interest rates to go higher than lower in six months time.
A higher index in November means that more people projected interest rates to go up from the level in October.
The index for prospective housing prices fell 3 points to an all-time low of 61, which shows that more consumers expect housing prices to go down further in the following year.
The composite consumer sentiment index (CCSI) also fell 2.3 points to 86.5 in November from the previous month, declining for two straight months. A reading above 100 means that people are more optimistic than pessimistic about the economy while vice versa for a reading below 100.
CCSI rose to 91.4 in September from 86.0 in July and 88.8 in August before falling to 88.8 in October and 86.5 in November. Hwang noted that concerns continued about economic slowdown amid sluggish exports and high prices.
Five of the 6 major indicators that make up the CCSI fell from a month ago.
The index for prospective living standards fell 2 points from the previous month to 82 in November, prospective household income 1 point to 93, prospective household spending 3 points to 107, current domestic economic conditions 1 point to 46, and prospective domestic economic conditions 2 points to 54. The index for current living standards was unchanged at 83.
By Lee Eun-joo
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