SEOUL, Aug. 25 (AJP) — South Korea's consumer confidence fell for the first time in four months in August as a stock-market correction and accumulated price pressures weighed on sentiment despite solid economic conditions, central bank data showed Tuesday.
The Bank of Korea's Composite Consumer Sentiment Index (CCSI) fell 2.3 points from a month earlier to 104.5, snapping three straight months of gains since May. The index nevertheless remained above the benchmark of 100.
A reading above 100 means consumer sentiment is more optimistic than the long-term average, while a reading below 100 indicates greater pessimism.
All six components used to calculate the headline index fell from July, with consumers becoming less upbeat about both economic conditions ongoing and ahead.
The index measuring perceptions of current economic conditions dropped 5 points to 79, while the outlook for the economy six months ahead fell 3 points to 89.
The BOK attributed the decline to a sharp correction in the domestic stock market and the accumulated burden of higher prices, even as exports and investment continued to support the broader economy.
The central bank said recent stock-market volatility had weighed on households' perceptions of economic conditions and savings, which include holdings of stocks and investment funds.
Job prospects also weakened, with the employment outlook index falling 3 points to 86.
The BOK pointed to continued declines in manufacturing and construction employment and persistent weakness among younger workers, particularly in industries with high exposure to artificial intelligence.
The central bank said employment expectations fell across age groups but more sharply among people under 40. A recent BOK study found that much of the decline in youth employment over the past four years was concentrated in industries with high AI exposure.
Households also grew less upbeat about their own finances. The index for current living conditions fell one point to 92, while expectations for living standards six months ahead declined one point to 97.
Household income expectations slipped one point to 100, while the spending outlook edged down to 109.
Housing expectations also cooled after rising sharply in recent months. The housing price outlook index fell 2 points to 125 from 127 in July as consumers took into account recent tax changes and government measures aimed at increasing housing supply. It was the first decline after four consecutive monthly gains through July.
The index nevertheless remained well above 100, indicating that consumers expecting home prices to rise over the coming year still outnumbered those expecting a decline.
The interest-rate outlook index slipped one point to 125, while the prospective price-level index was unchanged at 149.
Consumers estimated inflation over the past year at 3.0 percent, while their median expectation for consumer-price inflation over the coming year remained at 2.7 percent for a second straight month.
Inflation expectations three and five years ahead were also unchanged at 2.6 percent.
The BOK said upward pressure from the prolonged stalemate in the Middle East conflict was offset by expectations for further interest-rate increases and the recent strengthening of the won against the U.S. dollar.
Petroleum products remained the most frequently cited factor expected to push up consumer prices over the next year, selected by 50.2 percent of respondents.
Agricultural, livestock and fishery products followed at 42.0 percent, amid extreme summer heat, while 33.3 percent cited public utility charges.
The share citing agricultural, livestock and fishery products jumped 7.9 percentage points from July and the share pointing to rents rose 3.4 points, while the proportion citing petroleum products fell 7.3 points.
The survey was conducted from Aug. 7 to 14 among 2,500 households in cities nationwide, with 2,244 responding.
AJP Takeaways
- South Korea's consumer confidence fell 2.3 points to 104.5 in August, its first decline in four months, as a stock-market correction and accumulated inflation weighed on sentiment.
- Employment expectations weakened amid job losses in manufacturing and construction and persistent weakness among younger workers in industries highly exposed to AI.
- Housing price expectations eased after four months of gains, while one-year inflation expectations held steady at 2.7 percent.
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