Consumer Sentiment Rises for Second Consecutive Month Amid Strong Exports and Stock Market Gains

Employees at Hana Bank's main office in Jung-gu, Seoul, celebrate the KOSPI surpassing 9,000 points on June 18. [Photo: Yonhap News]

Despite a decline in perceived economic conditions, consumer sentiment in South Korea has improved for the second consecutive month, driven by strong exports and rising stock prices.

According to the Bank of Korea's Consumer Trend Survey released on June 22, the Consumer Sentiment Index (CCSI) for June rose to 106.6, an increase of 0.5 points from the previous month. This marks a continuation of the upward trend that began 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.

Lee Heung-hoo, head of the Bank of Korea's Economic Psychology Research Team, stated, "Although this month's consumer sentiment index has not yet reached levels seen before the Middle East conflict due to high inflation and exchange rates, the two-month consecutive rise suggests a more optimistic economic outlook compared to the long-term average."

Among the six indices that make up the CCSI, the current living conditions index rose by 1 point to 94. The indices for future living conditions (97), household income expectations (100), and consumption expenditure expectations (110) remained unchanged from the previous month.

The current economic conditions index was recorded at 86, up 3 points from the previous month. In contrast, the future economic conditions index fell by 1 point to 92.

Expectations for interest rates surged by 12 points to 126, marking the largest increase in nearly nine and a half years since December 2016. This reflects expectations for a rise in the benchmark interest rate and increasing market rates.

The housing price outlook increased by 8 points to 120, driven by rising apartment sales and rental prices in the Seoul and Gyeonggi regions.

Despite upward pressures from rising consumer prices and high exchange rates, the expected inflation rate for the next year remains unchanged at 2.8%, influenced by hopes for an end to the Middle East conflict and anticipated monetary tightening.

Looking ahead, consumer sentiment next month is expected to be significantly influenced by the normalization of energy supply chains and inflation impacts. Lee noted, "While the U.S. and Iran have reached a ceasefire agreement, the pace of normalization in the Middle East energy supply chain and its subsequent impact on prices, along with global IT market trends, will play a crucial role in shaping consumer sentiment."

* This article has been translated by AI.