Domestic stock market volatility has decreased, and with positive trends in the real economy, consumer sentiment has rebounded after a month of decline. Expectations for improved income conditions due to expanded growth have also contributed to sustained optimism regarding housing prices.
According to the Bank of Korea's 'September Consumer Trend Survey' released on the 23rd, the Consumer Sentiment Index (CCSI) for this month rose to 106.6, an increase of 2.1 points from the previous month. After three consecutive months of increases from May to July, the index fell by 2.3 points in August but has returned to an upward trend this month. The survey was conducted from September 9 to 16.
The CCSI is a composite indicator reflecting consumers' perceptions of current economic conditions and future expectations. A score above 100 indicates optimistic sentiment above the long-term average, while a score below 100 indicates pessimism. It is calculated using six components: current living conditions, living conditions outlook, household income outlook, consumption expenditure outlook, current economic assessment, and future economic outlook.
The Bank of Korea analyzed that the improvement in consumer sentiment is linked to reduced stock market volatility and favorable trends in exports and consumption. Notably, heightened expectations for improved income conditions due to expanded growth have played a significant role.
A Bank of Korea official stated, "The strong performance of semiconductor exports is leading to increased capital investment and improved consumption, which clearly impacts income conditions, as reflected in this survey." However, the official cautioned, "Given the stock market situation and various unexpected factors such as conflicts in the Middle East, it is difficult to predict that consumer sentiment will continue to rise until the end of the year."
Detailed indicators also show improved perceptions regarding the economy and income.
The household income outlook CSI rose by 2 points to 102. The living conditions outlook CSI increased by 1 point to 98, while the consumption expenditure outlook CSI rose by 1 point to 110. The current economic assessment CSI saw the largest increase among the main components, rising by 4 points to 83. The future economic outlook CSI increased by 1 point to 90, and the employment opportunity outlook CSI rose by 2 points to 88.
The interest rate outlook CSI increased by 3 points to 128, the highest level since October 2023. However, this remains below the all-time high of 132 recorded in January 2023.
The Bank of Korea official noted that it is difficult to determine whether the rise in the interest rate outlook CSI reflects only the Bank's rate hike in August or expectations for further increases. He explained, "This item assesses expectations for future interest rates in our country, so it should reflect not only the base rate but also loan rates, bond rates, and overall market rates."
The housing price outlook CSI remained steady at 125. Factors such as the strong upward trend in apartment prices in the metropolitan area, government real estate policies, and the recent rate hike on August 27 have contributed to maintaining this high level.
The Bank of Korea assessed that the housing price outlook CSI is still significantly above the long-term average of 107. The continued rise in housing prices in the metropolitan area during the survey period is also cited as a reason for maintaining high expectations. Regionally, Seoul recorded the highest score at 133, while the six major metropolitan cities and other areas were in the low to mid-120s.
For the next year, the expected inflation rate is projected at 2.7%, unchanged from the previous month. This reflects conflicting influences from upward factors such as rising international oil prices due to renewed conflicts in the Middle East and downward factors such as ongoing monetary tightening and a decline in the won-dollar exchange rate. The expected inflation rates for three and five years ahead also remained at 2.6%, consistent with the previous month.
The price level outlook CSI rose by 1 point to 150, and the wage level outlook CSI also increased by 1 point to 124. The perception of inflation remained steady at 3.0%, unchanged from the previous month.
* This article has been translated by AI.
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