Expected Inflation Falls for Two Consecutive Months... Housing Price Outlook at 'All-Time Low'

Bank of Korea Announces September Consumer Sentiment Survey
Expected Inflation Falls 0.1%p from August
Consumer Sentiment Index Rises 2.6 Points
Uncertainty High but Consumer Sentiment Slightly Improves

Citizens are shopping at a large supermarket in downtown Seoul. Photo by Mun Ho-nam munonam@

As high-intensity tightening policies continue in major countries including the United States, international oil prices have somewhat stalled, leading to a decline in the expected inflation rate (the anticipated consumer price increase over the next year) for the second consecutive month. Housing price forecasts fell to an all-time low due to weakened buying demand influenced by the decline in apartment prices.

According to the September Consumer Sentiment Survey results released by the Bank of Korea on the 27th, the expected inflation rate was recorded at 4.2%, down 0.1 percentage points from 4.3% in August. The expected inflation rate had risen to 4.7% in July, marking the highest level since statistics began in 2008, but it has declined for two consecutive months in August and September.

Looking at the distribution of responses for the expected inflation rate, the largest share (18.5%) anticipated consumer prices to rise by 4-5% over the next year, followed by 17.7% expecting a 3-4% increase. Compared to the previous month, when 19.2% expected prices to rise by 6% or more, this suggests a somewhat weakened expectation of inflation.

The response shares for major items expected to influence consumer price increases over the next year were public utility charges (49.6%), agricultural, livestock, and fishery products (49.5%), and petroleum products (41.4%), in that order. Compared to the previous month, the share of responses for public utility charges increased by 4.0 percentage points, while those for petroleum products and rent decreased by 5.6 and 2.7 percentage points, respectively.

On the 14th, in a real estate-dense shopping district in Songpa-gu, Seoul, where the decline in real estate prices and the transaction freeze phenomenon continue, apartment listings with market prices are posted. Photo by Kang Jin-hyung aymsdream@

The Consumer Confidence Index (CCSI) for September was 91.4, up 2.6 points from the previous month. The CCSI is an indicator calculated using six of the 15 indices that make up the Consumer Sentiment Index (CSI): current living conditions, expected living conditions, expected household income, expected consumption expenditure, current business conditions, and business outlook. A value below 100 indicates that consumer sentiment is pessimistic compared to the long-term average (2003?2021).

Although the September index remains below 100, indicating a prevailing negative outlook, consumer sentiment has improved with two consecutive months of increase following July (86.0), rising to 88.8 in August and 91.4 in September. Hwang Hee-jin, head of the Bank of Korea’s Statistics Survey Team, explained, "Despite ongoing monetary tightening in major countries and increased economic uncertainty, employment and face-to-face service consumption have shown favorable trends. Additionally, the decline in international oil prices has somewhat eased inflationary pressures, resulting in a slight increase compared to the previous month."

The Interest Rate Expectation CSI was 147, down 2 points from the previous month but still at a high level due to the Bank of Korea’s continued policy of raising the base interest rate. The Housing Price Expectation CSI fell 9 points to 67, reaching an all-time low as the decline in apartment sale prices expanded and buying sentiment weakened. The Employment Opportunity Expectation CSI rose 4 points, supported by a favorable trend with employment increasing by 810,000 compared to the same month last year.

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