Consumer confidence lags in July

Consumer confidence dipped to a five-month low in July as the economic outlook became bleaker due to the euro zone debt crisis, the central bank said yesterday.

The consumer sentiment index (CSI) - a gauge of consumers’ overall economic outlook, living conditions and future spending - came in at 100 for July, down from 101 the previous month, according to a survey by the Bank of Korea (BOK).

The July data marked the lowest level since the index hit 100 in February, the bank said. A reading below 100 indicates that pessimists outnumber optimists.

The survey, based on a poll of 2,050 households in 56 cities, was conducted July 11-18.

The Bank of Korea cut its 2012 growth outlook on July 13 to 3 percent from an earlier estimate of 3.5 percent, citing growing downside risks.

The central bank delivered a surprise rate cut to 3 percent on July 12, underscoring its urgency to shield the economy from the impact of problems in the euro zone.

Citing the recent drops in oil prices, the central bank also cut its 2012 inflation projection to 2.7 percent from its previous estimate of 3.2 percent. The bank aims to keep its median inflation target at 3 percent for 2010-2012.

Korean consumers in July expect an average of 3.6 percent inflation over the next 12 months, down from 3.7 percent the previous month, according to the bank.

The growth of Korea’s consumer prices slowed to the 2 percent range for the fourth straight month in June.
The sub-index measuring consumers’ economic growth outlook stood at 81 for this month, unchanged from the previous month, and the index gauging consumers’ assessment of current economic conditions fell to 71 for July from 74 in June.

The index of consumers’ projections for interest rates came in at 105 this month, down from 107 tallied in the previous month, indicating that consumers expect the central bank to cut the key rate.

Yonhap