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Consumer sentiment has turned optimistic again after a month, buoyed by strong semiconductor exports and a rising stock market.
According to the Bank of Korea's "May Consumer Trend Survey" released on May 22, the Consumer Sentiment Index (CCSI) rose by 6.9 points from the previous month to 106.1. This marks a recovery above the baseline of 100, which it fell below for the first time in a year last month.
The CCSI is calculated using six indices: current living conditions, future living conditions, household income expectations, consumption expenditure expectations, current economic conditions, and future economic conditions. A score above 100 indicates optimistic consumer sentiment compared to the long-term average (2003-2024), while a score below 100 indicates pessimism.
All six components of the CCSI increased in this survey. Notably, the future economic outlook index surged by 14 points to 93. This increase is attributed to a first-quarter GDP growth rate that significantly exceeded expectations and upward revisions of growth forecasts by major institutions. The current economic conditions index also rose by 15 points to 83.
Despite high oil prices, the current living conditions index increased by 2 points to 93, influenced by a booming stock market and support payments for high oil prices. The future living conditions index rose by 5 points to 97, while household income expectations (100) and consumption expenditure expectations (110) each increased by 2 points.
Lee Heung-hoo, head of the Bank of Korea's Economic Sentiment Survey Team, stated, "The increase in consumer optimism is driven by strong exports centered on semiconductors and the rising stock market, marking a turnaround after three months of decline. We need to continue monitoring the energy supply situation due to Middle East tensions, global economic trends, and semiconductor export conditions."
The interest rate outlook index (115) remains above the long-term average of 111, reflecting ongoing expectations for rising rates. However, it fell by 1 point due to easing tensions in the Middle East following reports of U.S.-Iran negotiations.
The housing price outlook index (112) rose by 8 points, driven by a decrease in listings around May 10, when the government resumed higher capital gains taxes on multiple homeowners, leading to increased apartment prices in Seoul.
The expected inflation rate for consumer prices over the next year is 2.8%, down 0.1 percentage points from the previous month. In contrast, the perceived inflation rate over the past year rose to 3.0%, an increase of 0.1 percentage points.
Lee added, "The reports of negotiations between the U.S. and Iran in early May created expectations for peace. The government's inflation stabilization measures also seem to have eased consumer inflation expectations, according to our survey."
He concluded, "To determine whether the decline in expected inflation in May is temporary, we need to monitor the energy supply situation due to future Middle East developments and the trend of consumer price increases."
According to the Bank of Korea's "May Consumer Trend Survey" released on May 22, the Consumer Sentiment Index (CCSI) rose by 6.9 points from the previous month to 106.1. This marks a recovery above the baseline of 100, which it fell below for the first time in a year last month.
The CCSI is calculated using six indices: current living conditions, future living conditions, household income expectations, consumption expenditure expectations, current economic conditions, and future economic conditions. A score above 100 indicates optimistic consumer sentiment compared to the long-term average (2003-2024), while a score below 100 indicates pessimism.
All six components of the CCSI increased in this survey. Notably, the future economic outlook index surged by 14 points to 93. This increase is attributed to a first-quarter GDP growth rate that significantly exceeded expectations and upward revisions of growth forecasts by major institutions. The current economic conditions index also rose by 15 points to 83.
Despite high oil prices, the current living conditions index increased by 2 points to 93, influenced by a booming stock market and support payments for high oil prices. The future living conditions index rose by 5 points to 97, while household income expectations (100) and consumption expenditure expectations (110) each increased by 2 points.
Lee Heung-hoo, head of the Bank of Korea's Economic Sentiment Survey Team, stated, "The increase in consumer optimism is driven by strong exports centered on semiconductors and the rising stock market, marking a turnaround after three months of decline. We need to continue monitoring the energy supply situation due to Middle East tensions, global economic trends, and semiconductor export conditions."
The interest rate outlook index (115) remains above the long-term average of 111, reflecting ongoing expectations for rising rates. However, it fell by 1 point due to easing tensions in the Middle East following reports of U.S.-Iran negotiations.
The housing price outlook index (112) rose by 8 points, driven by a decrease in listings around May 10, when the government resumed higher capital gains taxes on multiple homeowners, leading to increased apartment prices in Seoul.
The expected inflation rate for consumer prices over the next year is 2.8%, down 0.1 percentage points from the previous month. In contrast, the perceived inflation rate over the past year rose to 3.0%, an increase of 0.1 percentage points.
Lee added, "The reports of negotiations between the U.S. and Iran in early May created expectations for peace. The government's inflation stabilization measures also seem to have eased consumer inflation expectations, according to our survey."
He concluded, "To determine whether the decline in expected inflation in May is temporary, we need to monitor the energy supply situation due to future Middle East developments and the trend of consumer price increases."
* This article has been translated by AI.
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