Expected Inflation in August at 4.3%... Declined for the First Time in 8 Months

Reflecting Expectations of Peak Inflation Trends

[Asia Economy Reporter Seo So-jeong] The 'expected inflation,' which is the anticipated consumer price inflation rate for the next year, fell by 0.4 percentage points from the previous month, marking a reversal to a decline. This reflects expectations that the soaring inflation has reached its peak.

According to the 'August Consumer Sentiment Survey Results' released by the Bank of Korea on the 23rd, the expected inflation rate this month was 4.3%, down 0.4 percentage points from the previous month. This is the first time since December last year that expected inflation has turned downward.

The expected inflation rate was 2.7% in December last year, briefly declined to 2.6% in January, but then continued to rise for seven consecutive months. After entering the 3% range in April (3.1%), it rose to 3.9% in June and surged to nearly 5% in July.

Hwang Hee-jin, head of the Bank of Korea’s Statistics and Survey Team, explained, "Expectations that global inflation trends are nearing their peak and government announcements that inflation will peak in the second half of this year seem to have influenced consumer sentiment. The recent slight decline in oil prices likely also had an impact."

The inflation perception, an indicator reflecting the consumer price inflation rate over the past year, remained unchanged at 5.1% from the previous month.

Regarding why inflation perception remained steady despite the drop in expected inflation, Team Leader Hwang said, "Although oil prices fell, prices of food and vegetables rose due to recent heavy rains. As the felt inflation increased, inflation perception remained high, but the expected inflation rate fell, reflecting expectations of a peak-out in inflation in the second half of the year."

The interest rate level outlook index (149) fell by 3 points as expectations for further rate hikes weakened somewhat after the significant increase in the base interest rate. If more people expect interest rates to rise in six months than those who expect them to fall, this index exceeds 100.

The housing price outlook index (76) dropped by 6 points due to the expanding decline in apartment sale prices, weakened buyer sentiment, and rising market interest rates.

The Consumer Confidence Index (CCSI) rose by 2.8 points from the previous month to 88.8. Team Leader Hwang said, "Although concerns about high inflation and economic slowdown in major countries persist, the consumer confidence index slightly increased from the previous month due to expectations of inflation peak-out and a slowdown in the pace of global monetary tightening."

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