Korean consumer confidence jumps to four-year high on stimulus hope

SOUTH Korea’s consumer confidence rose to the highest in four years as easing domestic political uncertainty, fresh fiscal stimulus and hopes for pro-growth policies under the new administration buoyed sentiment. 

The composite consumer sentiment index climbed 6.9 points to 108.7 in June, rising well below the threshold of 100 that divides optimism from pessimism, according to a Bank of Korea survey released on Tuesday. 

Confidence has now risen for a third straight month after plunging in December to the lowest level since the pandemic.

That drop came during a period of turmoil triggered by former President Yoon Suk Yeol’s abrupt declaration of martial law, which sparked a constitutional crisis that ultimately led to his impeachment.

The improvement in sentiment underscores renewed optimism in Asia’s fourth-largest economy after months of political turbulence and sluggish consumption.

The government under newly elected President Lee Jae Myung has announced a 30.5 trillion won (S$28.5 billion) supplementary budget to revive growth and restore confidence among households.

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The expected inflation rate, consumers’ forecast for the rise in consumer prices over the next year, fell by 0.2 percentage point to 2.4 per cent from a month earlier.

The decline is attributed to easing consumer price growth amid falling agricultural and petroleum product prices, as well as the government’s continued focus on price stabilisation, the central bank said in a statement. BLOOMBERG