Due to Rapid Rise in Living Costs... Consumer Sentiment Index Declines for the First Time in 4 Months

The Bank of Korea's 'March 2024 Consumer Sentiment Index'

On the 25th, as the prices of fruits and vegetables, including apples, soared, citizens visiting the Hanaro Mart Seongnam branch in Seongnam, Gyeonggi Province, were shopping amid a surge in food prices. Photo by Jo Yongjun jun21@

The Consumer Confidence Index (CCSI) turned downward as the cost of living, including apples, pears, and tangerines, rose and domestic demand showed sluggishness.

According to the "March Consumer Survey Results" announced by the Bank of Korea on the 26th, this month's CCSI was 100.7, down 1.2 points from the previous month.

The CCSI had shown an upward trend for three consecutive months from November last year (97.3), December (99.7), January this year (101.6), and February (101.9), but turned downward this month.

The CCSI is a sentiment indicator calculated using six major indices from the Consumer Sentiment Index (CSI). The long-term average (from January 2003 to December 2023) is set as the baseline value of 100. An index above 100 indicates that expectations about the economic situation are more optimistic than the long-term average, while below 100 indicates pessimism.

The CCSI showed a pessimistic trend from September last year (99.8), October (98.2), November (97.3), and December (99.7), but entered an optimistic phase starting January this year.

Hwang Hee-jin, head of the Statistical Survey Team at the Economic Statistics Bureau of the Bank of Korea, explained the cause of the CCSI's downward turn as "Although South Korea's exports are showing favorable performance, the cost of living, including agricultural products and transportation costs, has risen, maintaining a high level of prices perceived by consumers."

The interest rate level outlook was 98, falling 2 points from the previous month due to expectations of policy rate cuts and declines in market interest rates.

The housing price outlook was 95, rising 3 points from the previous month as the decline in apartment sale prices continued, but loan interest rates decreased due to falling market interest rates.

The price level outlook was 146, rising 2 points from the previous month as perceived prices of agricultural products increased, international oil prices showed an upward trend, and the possibility of public utility fee hikes in the second half of the year was mentioned.

Price perception, which shows awareness of the consumer price inflation rate over the past year, remained unchanged at 3.8% from the previous month. On the other hand, the expected inflation rate, which shows the outlook for price increases over the next year, rose 0.2 percentage points to 3.2% from the previous month.

The major items expected to influence consumer price increases over the next year were agricultural, livestock, and fishery products (63.4%), public utility fees (54.2%), and petroleum products (27.0%). Compared to the previous month, the response rate for agricultural, livestock, and fishery products increased by 11.9 percentage points, while the shares for public utility fees (-5.1 percentage points) and industrial products (-2.9 percentage points) decreased.

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