'High Inflation Shock' Causes Consumer Spending to Decline for Four Consecutive Months... First Time in 24 Years Since IMF (Update)

June Industrial Activity Trends

[Asia Economy Sejong=Reporter Son Seon-hee] Domestic consumption has contracted for four consecutive months due to the sharp rise in inflation. This marks the first time in about 24 years since early 1998 that consumption has declined for four consecutive months.

According to the 'June Industrial Activity Trends' released by Statistics Korea on the 29th, the retail sales index (seasonally adjusted) last month was 118.3 (2015=100), down 0.9% from the previous month. The retail sales index has fallen for four consecutive months following -0.7% in March, -0.3% in April, and -0.2% in May. Consumption has decreased for four consecutive months for the first time in 24 years and 5 months since October 1997 to January 1998.

Eo Un-seon, Director of Economic Trend Statistics at Statistics Korea, explained, "There were some disruptions in vehicle deliveries due to freight transport issues in June," adding, "Demand for outdoor activities decreased due to hotter-than-usual weather, leading to a decline in sales of semi-durable goods, and consumer sentiment was somewhat dampened by rising prices and interest rate hikes."

The total industrial production index (seasonally adjusted, excluding agriculture, forestry, and fisheries) in June was 117.9 (2015=100), up 0.6% from the previous month. This marks two consecutive months of increase following 0.8% in May. Manufacturing led the increase in total industrial production, rising 1.8%, the largest increase since 3.5% in December last year. In contrast, the service sector declined by 0.3%.

Facility investment increased by 4.1%, while construction performance decreased by 2.0%.

The coincident index, which indicates the current economic condition, rose 0.2 points from the previous month to 102.4, showing an upward trend for two consecutive months. The leading index, which predicts future economic conditions, remained steady at 99.4.

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