Inflation expectations rise amid growing geopolitical risks

Customers shop at a supermarket in central Seoul on Tuesday. [YONHAP]

Inflation expectations bounced back for the first time in eight months in October amid growing geopolitical risks, according to Bank of Korea data on Wednesday.

Inflation expectations inched up a 0.1 percentage point from a month earlier to 3.4 percent in October. The last time the on-month inflation expectation increased was in February, when it rose 0.1 percentage point.

“Uncertainties have grown amid the rise of global oil price due to the Israel-Hamas war,” said Hwang Hee-jin, head of the Bank of Korea’s Economic Survey Team. Hwang added potential increase of public utility fees in October and a continued rise of agricultural products also attributed to the inflation expectations.

Expectations about future inflation could drive up inflation, as it could cause businesses to raise prices and people to demand higher wage.

Consumer sentiment slid for the third consecutive month in October.

The composite consumer sentiment index was 98.1 in October compared to 99.7 from a month earlier. The October figure was the lowest since May, when it hit 98.

A reading below 100 means pessimists outnumber optimists.

BY JIN MIN-JI [jin.minji@joongang.co.kr]