"Impact of Middle East War" Consumer Sentiment Turns 'Pessimistic' for First Time in a Year

April Consumer Sentiment Index (CCSI) Falls to 99.2, Down 7.8 Points
Disruptions in Energy Supply, Rising Inflation, and Economic Slowdown Concerns
Current Economic Assessment and Future Outlook Drop by 18 and 10 Points, Respectively

The Consumer Composite Sentiment Index (CCSI) turned 'pessimistic' in April for the first time in a year. This shift is attributed to disruptions in energy supply caused by the Iran war, as well as heightened uncertainty in both domestic and global economies, which have fueled concerns over rising inflation and an economic slowdown.

Falls Below Long-Term Average of 100 for First Time in a Year: "Impact of Middle East War"

According to the "April 2026 Consumer Survey Results" released by the Bank of Korea on the 23rd, the CCSI for this month stood at 99.2, down by 7.8 points from the previous month. This marks the biggest drop since December 2024, when the 12·3 Martial Law incident occurred (-12.7 points), and signals a shift to a pessimistic outlook compared to the long-term average. The CCSI is an index that comprehensively reflects consumer perceptions of economic conditions. It is calculated using six major indices that make up the Consumer Sentiment Index (CSI), including current living conditions, household income outlook, and consumer spending outlook. The long-term average (from January 2003 to December 2025) is set at a reference value of 100; a figure above 100 indicates optimism compared to the long-term average, while a figure below 100 reflects pessimism.

Lee Heunghu, Head of the Economic Sentiment Survey Team at the Bank of Korea's Economic Statistics Department 1, stated, "The CCSI fell below 100 for the first time in a year since April last year, as concerns over inflation and an economic slowdown intensified due to energy supply disruptions and greater uncertainty in domestic and global economies." He added, "However, it remains close to the long-term average."

The CCSI had plummeted to 87.9 in December 2024 amid the martial law crisis, with consumer sentiment weakening, and remained below the reference value (100) through April last year. In May, the easing of trade risks following the U.S. mutual tariff suspension and expectations for a new government helped the CCSI surpass the reference value. Subsequently, improvement in consumption and strong exports kept the index fluctuating around 110 from July onward. In November, it rose to 112.3, the highest level in eight years. The index hovered around 110 until the Middle East war in March, which caused it to fall to 107, and this month it dropped below 100.

Current Economic Assessment and Future Outlook Down by 18 and 10 Points, Respectively

Consumer sentiment declined mainly due to drops in current economic assessment and future economic outlook. This month, the Current Economic Assessment CSI plunged by 18 points to 68, falling below the long-term average of 72. Lee explained, "This is the largest drop since December 2024 (-18 points)," and pointed out that "despite ongoing strong exports, the rise in oil and other energy prices and supply disruptions caused by the Middle East war, as well as increasing domestic and global economic uncertainty, affected consumer sentiment." The Future Economic Outlook CSI (79) also fell by 10 points due to concerns about rising energy prices, supply disruptions, inflation, and an economic slowdown, slipping below the long-term average of 86.

In contrast, the Housing Price Outlook CSI (104) rose by 8 points, driven by continued increases in Seoul apartment prices—especially in suburban areas—and concerns over higher construction and pre-sale prices amid the Middle East war. The Interest Rate Outlook CSI (115) also jumped by 6 points due to rising market and lending rates and worries over inflation.

The expected inflation rate for the next year, which reflects consumers' outlook on price increases, rose by 0.2 percentage points to 2.9%. This marks two consecutive months of increase since the Middle East war, reflecting concerns over inflation from raw material supply disruptions such as crude oil. Lee noted, "The consumer price inflation rate in March was 2.2%, as government price stabilization measures—including the petroleum price cap and stable food prices—helped keep inflation limited." He added, "Although international oil prices have surged due to the Middle East war, government measures have kept consumer price inflation relatively stable, which has influenced consumer inflation expectations."

The expected inflation rate for three years later remained unchanged at 2.6% compared to the previous month, while the expected inflation rate for five years later rose by 0.1 percentage points to 2.6% compared to the previous month.

This survey was conducted from the 9th to the 16th of this month among 2,500 urban households nationwide (with responses from 2,262 households).

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