Expected Inflation Hits 3.1%, Highest in 9 Years... Housing Price Outlook Index Also Soars

Bank of Korea, April Consumer Sentiment Survey Results

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jung] The expected inflation rate for consumer prices over the next year, as anticipated by consumers, has exceeded 3%, marking the highest level in nine years. The interest rate outlook reached an all-time high due to rising market interest rates, and the housing price expectation index also surged significantly amid hopes for eased real estate regulations.

According to the "April Consumer Survey Results" released by the Bank of Korea on the 27th, the Consumer Confidence Index (CCSI) for this month rose by 0.6 points from the previous month to 103.8. The consumer confidence index fluctuated depending on the increase in COVID-19 cases and the easing of quarantine measures but has been on the rise for two consecutive months.

The consumer confidence index is based on a benchmark value of 100; a value above 100 indicates optimism compared to the long-term average, while a value below 100 indicates pessimism. Hwang Hee-jin, team leader of the Statistical Survey Team at the Bank of Korea's Economic Statistics Bureau, explained, "The index level exceeded 100, with two of the six component indices rising, three remaining the same, and one declining."

Compared to March, among the six indices that make up the CCSI, the current economic condition index (74) rose by 3 points, and the current living conditions index (92) increased by 2 points. Household income expectations (99), consumption expenditure expectations (114), and future economic outlook (87) remained at similar levels. The living conditions outlook (95) fell by 1 point.

The interest rate outlook CSI (141) rose by 5 points from the previous month, reaching an all-time high due to rising market interest rates and inflation concerns.

The housing price outlook CSI (114) surged amid a slowdown in the decline of apartment sale prices and expectations for eased real estate regulations and development prospects. Team leader Hwang explained, "Actual housing prices vary by region, with some rising and others falling, but people's growing expectations for eased reconstruction and redevelopment regulations have caused the housing price outlook index to increase significantly."

Price perception and expected inflation rates rose by 0.3 percentage points and 0.2 percentage points from the previous month to 3.2% and 3.1%, respectively. The expected inflation rate was the highest in nine years since April 2013 (3.1%).

Team leader Hwang said, "The high levels of consumer and producer price increases, along with increased activities following the lifting of social distancing, have influenced this. Also, supply-side inflation factors such as supply chain disruptions due to the prolonged Ukraine crisis are frequently reported in the news, which seems to have led consumers to expect higher inflation rates."

This survey was conducted from the 12th to the 19th of this month, targeting 2,500 households nationwide.

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