South Korea Oct expected inflation falls to record low, consumer confidence slips

[SEOUL] South Korean consumer confidence fell to a three-month low in October as the economy struggled to regain traction, a survey by the central bank showed on Tuesday.

Highlighting public concerns that the economic outlook will remain weak for some time, consumers also expected inflation for the next year to fall to a record low.

The composite consumer index (CCSI) edged down to 105 in October, compared to 107 in the previous month, the Bank of Korea said. It was the lowest since the index stood at the same 105 level in July.

A reading above 100 indicates consumers feel more positive in the coming month than the long-term average sentiment accrued from 2003 to 2012.

The central bank's index has so far stayed above the neutral line this year and last fell below 100 in December 2012.

The survey also showed October's median expected inflation rate for the next 12 months at 2.7 per cent, which was the lowest on record since the Bank of Korea started the inflation survey in February 2002.

The rate had stayed at 2.8 per cent for five straight months through September. But 2.7 per cent still remains within the central bank's target band of 2.5 to 3.5 per cent.

The Bank of Korea has repeatedly said that recent low price pressures have been mainly due to supply-side reasons including low crude oil and agricultural products, rather than factors linked to local demand.

The bank sees inflation picking up gradually next year, although inflationary pressures are expected to remain soft for the time being.

The Bank of Korea said it polled more than 2,000 households across the nation from Oct 13 to 20.

Asia's fourth-largest economy grew a seasonally adjusted 0.9 per cent in July-September as government and consumer spending rebounded, data showed last week.

But exports were knocked by cooling global growth, a sign that more monetary easing may be needed to sustain a fragile recovery.

REUTERS