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South Korea Dec consumer sentiment, inflation expectation both fall

Wednesday, December 24, 2014 - 07:03

[SEOUL] South Korea's key consumer sentiment index hit the lowest in 20 months and consumers'inflation expectation for the coming 12 months hit a record low, a central bank survey showed on Wednesday.

The Bank of Korea said its consumer sentiment index fell for a third consecutive month in December, to 102 from 103 in November. The fresh figure is the lowest since April 2013, when the index was also 102.

The index, compiled from a survey of more than 2,000 households across the country, stayed above the neutral point of 100 for a 24th consecutive month. However, its string of declines adds to concerns that Asia's fourth-largest economy may be cooling.

Underscoring shaky consumer sentiment, the consumers' median expectation for 12-month inflation ticked down to 2.6 per cent in December from 2.7 percent in November, the lowest since data compilation began in February 2002.

Since July, the government has implemented stimulus measures such as increased fiscal spending, more financial support and easing of mortgage lending restrictions, while the central bank has cut interest rates twice.

The measures helped lift the country's quarterly economic growth to 0.9 per cent in the July-September period from 0.5 per cent in April-June, but the prospects are now dimmer as many economies are experiencing a slowdown.

Early this month, the Bank of Korea said inflation has slowed mainly due to plunges in global oil prices and would begin picking back up next year. Still, some analysts and media contend that deflationary risks to the economy are increasing.

REUTERS