The consumer sentiment index, which rebounded last month, fell again after one month. High exchange rates and rising living costs combined to weaken consumer sentiment.

According to the Dec. Consumer Survey released by the Bank of Korea on the 23rd, the consumer composite sentiment index (CCSI) was 109.9, down 2.5 points from the previous month. The CCSI had fallen for two straight months from September (-1.3 points, 110.1) before rebounding last month (+2.6 points, 112.4), but turned downward again after one month.

As the strong exchange rate drives up the cost of imported meat, U.S. beef is on display at the meat counter of a large supermarket in Seoul on the 23rd. /Courtesy of News1

The CCSI is calculated by combining six items among the 17 indices included in the Consumer Survey Index (CSI): ▲ current living conditions ▲ outlook for living conditions ▲ outlook for household income ▲ outlook for consumer spending ▲ assessment of current economic conditions ▲ outlook for future economic conditions. If the index is above 100, it means consumer sentiment is optimistic compared with the long-term average (2003–2024), and if it is below 100, it is pessimistic.

Among the components, the decline in economy-related indices was notable. The index for assessing current economic conditions fell sharply from 96 in the previous month to 89 this month, and the index for the outlook for future economic conditions also fell from 102 to 96.

Perceptions of household financial conditions also deteriorated. The index for current living conditions fell from 96 to 95, and the index for the outlook for living conditions dropped from 101 to 100. The index for the outlook for household income also fell from 104 to 103. However, the index for the outlook for consumer spending held steady at 110, the same as the previous month.

By contrast, expectations for prices and home prices strengthened. The index for the outlook for the price level rose from 146 last month to 148 this month, and the index for the outlook for dwelling prices rose from 119 to 121. The two indices reflect expectations for the levels of prices and dwelling prices in one year, and a reading above 100 indicates an expected increase.

Expected inflation a year ahead was 2.6%, unchanged from the previous month. Expected inflation three years ahead rose from 2.5% to 2.6%, and expected inflation five years ahead held at 2.5%.

Lee Hye-young, head of the economic sentiment survey team at the Bank of Korea, said, "As the increase in living costs widened and exchange rate volatility grew, the consumer sentiment index fell."

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