Consumer Sentiment Declines for the First Time in 5 Months Amid COVID-19 Resurgence

[Image source=Yonhap News]

[Asia Economy Reporter Kim Eun-byeol] The consumer sentiment index, which had been rising for four consecutive months, plummeted due to the resurgence of COVID-19. The housing price outlook also broke its upward trend after four months.

According to the Bank of Korea's Consumer Survey on the 25th, the September Consumer Sentiment Index (CCSI) fell by 8.8 points from the previous month to 79.4. The CCSI uses the long-term average from 2003 to 2019 as the baseline (100); a value above 100 indicates optimism compared to the long-term average, while below 100 indicates pessimism.

The CCSI, which had dropped to 70.8 in April, showed signs of recovery with 77.6 in May, 81.8 in June, 84.2 in July, and 88.2 in August. However, it declined again as COVID-19 resurged domestically. A Bank of Korea official explained, "Perceptions of the economy and household financial conditions worsened due to the escalation of social distancing measures caused by the COVID-19 resurgence."

Looking at the contribution by component indices, the consumption expenditure outlook showed the largest negative contribution of -2.6 points, indicating that concerns about spending due to social distancing had a significant impact.

The Current Living Conditions CSI (81) and Living Conditions Outlook CSI (85) both fell by 4 points compared to the previous month, while the Household Income Outlook CSI (88) and Consumption Expenditure Outlook CSI (92) dropped by 4 points and 7 points respectively.

The Employment Opportunity Outlook CSI (60) decreased by 12 points as economic activities contracted due to the spread of COVID-19.

The Housing Price Outlook CSI (117) fell by 8 points as the nationwide apartment sales price increase slowed down due to government housing market stabilization measures. This broke the upward trend that had continued from June to August after four months.

The indicator, which reflects sentiment about housing prices one year ahead, had surged to 125 in last month's survey?the second highest since statistics began in 2008?despite government real estate policies, as housing prices continued to rise. A Bank of Korea official said, "The nationwide apartment sales price increase slowed due to government housing market stabilization measures, leading to the decline."

The expected inflation rate rose by 0.1 percentage points from the previous month to 1.9%. The major items expected to influence consumer price increases over the next year were agricultural, livestock, and fishery products (58.7%), rent (39.4%), and public utility charges (33.7%) in that order.

This content was produced with the assistance of AI translation services.