Consumer sentiment hit 13-month high amid slowing inflation

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Consumer sentiment hit 13-month high amid slowing inflation

Published: 28 Jun. 2023, 10:22 Updated: 28 Jun. 2023, 11:47

Ramyeon bundles are displayed at a discount store in Seoul on Monday. [YONHAP]

Consumer sentiment hit a 13-month high in June as Koreans welcomed slowing inflation and post-pandemic consumption sped up, cental bank data showed Wednesday.

The composite consumer sentiment index stood at 100.7 in June, up from 98 the previous month, marking the fourth consecutive month of rise, according to the survey from the Bank of Korea (BOK).

Also, the June reading is the highest since 102.9 in May last year. A reading above 100 means optimists outnumber pessimists.

The central bank said hopes for the easing of economic slowdown, mild recovery in private spending in the post-pandemic era and eased inflation helped boost consumer sentiment.

The country's inflation expectations stayed flat compared with the previous month at 3.5 percent for the year ahead, the lowest in a year in June.

The figures are closely watched, as their upward move could cause businesses to raise prices and people to ask for pay raises, thereby resulting in more upward pressure on inflation going forward.

Consumer prices, a key gauge of inflation, rose 3.3 percent in May from a year earlier, slowing from a 3.7 percent on-year rise in April. The latest reading marked the lowest level since 3.2 percent in October 2021.

Korea's inflation has been on a downward trend with some ups and downs after reaching a peak of 6.3 percent in July last year.

But the latest figure is still above the central bank's medium-term target of 2 percent.

Last month, the BOK kept its benchmark rate unchanged at 3.5 percent, the third straight month of a rate freeze, as it trimmed this year's growth estimate in the face of an extended slowdown in exports amid easing inflationary pressure.

BY SOHN DONG-JOO, YONHAP [sohn.dongjoo@joongang.co.kr]