October Expected Inflation at 4.3%... Rises Again After Three Months

Housing Price Outlook Index Hits All-Time Low

[Image source=Yonhap News]

[Asia Economy Reporter Seo So-jung] The expected inflation rate, which indicates the anticipated inflation over the next year, rebounded after three months, leading to forecasts that the high inflation situation will continue. Due to the Bank of Korea's base interest rate hikes, housing demand has weakened, causing future housing price expectations to fall to historically low levels.

According to the October Consumer Sentiment Survey results released by the Bank of Korea on the 25th, the expected inflation rate rose by 0.1 percentage points from last month (4.2%) to 4.3%. In July, the expected inflation rate reached 4.7%, the highest level since statistics began in 2008. It then declined for two consecutive months in August and September due to falling international oil prices but rebounded this month.

The response proportions for major items expected to influence consumer price increases over the next year were public utility charges (61.9%), agricultural, livestock, and fishery products (42.6%), and petroleum products (39.0%), with the response proportion for public utility charges increasing by 12.3 percentage points compared to the previous month.

Regarding the rebound in the expected inflation rate, Hwang Hee-jin, head of the Bank of Korea's Statistics and Survey Team, explained, "The consumer price inflation rate is still high at over 5%, and public utility charges such as electricity and gas were raised in October. The decline in international oil prices has slowed due to the crude oil production cut agreement. The rising trend in vegetable and dining-out prices continues, leading consumers to perceive that current prices are not low. Additionally, external factors such as rising U.S. interest rates and exchange rates have psychologically influenced expectations, causing the expected inflation rate to rise."

This month, the Housing Price Outlook Index recorded 64, down 3 points from last month (67), marking the lowest level ever. This index indicates that if it is above the baseline of 100, there is a majority expectation that housing prices will rise in one year, while a value below 100 means the majority expects housing prices to fall.

The Housing Price Outlook Index has been declining for five consecutive months since June (98), July (82), August (76), September (67), and this month.

The Consumer Confidence Index (CCSI) was 88.8, down 2.6 points from the previous month. The CCSI had risen for two consecutive months from July (86) to August (88.8) and September (91.4) but turned downward after three months.

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