South Korea’s consumers turn less pessimistic as inflation eases
SOUTH Korean consumers turned less pessimistic this month as inflation eased and exports improved.
The consumer survey index increased by 2.3 points to 99.5 in December, reversing course after four months of declines, the Bank of Korea (BOK) said on Wednesday (Dec 27). The reading below 100 indicates there are still more pessimists than optimists.
The index dipped below that threshold in September as global central banks warned that interest rates would remain higher for longer. Adding to the cautiousness, the BOK kept its key rate on hold with a hawkish bias after consumer inflation re-accelerated to a pace above 3 per cent from August.
Now the outlook for inflation is improving. While still above 3 per cent, price growth slowed more than expected in November, and the BOK expects the trend to moderate to its target of 2 per cent towards the end of next year.
Consumers are also paring their price growth outlooks. The central bank said inflation expectations among consumers for the next 12 months fell 200 basis points to 3.2 per cent in December, the lowest since early 2022.
South Korea announces its latest inflation reading on Friday. Economists surveyed by Bloomberg expect the reading to show consumer price growth stayed unchanged in December from November’s 3.3 per cent clip.
Among the components of the headline sentiment index, households’ outlook for the economy increased for a second month to 77 in December, coinciding with growing momentum in exports that underpin growth.
The survey was conducted Dec 11 to 18. BLOOMBERG
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