Consumer sentiment falls in August due to U.S. recession fears, stock market

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Consumer sentiment falls in August due to U.S. recession fears, stock market

Published: 20 Aug. 2024, 15:06

People shop for food at a discount mart in Seoul on Wednesday. Consumer prices rose 2.3 percent in July from a month earlier, showed Statistics Korea data on the same day, marking the slowest growth in 25 months. [NEWS1]

Korea's consumer sentiment fell back in August from a more than two-year high the previous month due to U.S. recession woes and the subsequent stock market rout, a central bank poll showed Tuesday.

The composite consumer sentiment index stood at 100.8 this month, down from the previous month's 103.6, the highest since April 2022, according to the survey conducted by the Bank of Korea (BOK).

A reading above 100 means optimists outnumber pessimists.

The central bank said consumer sentiment deteriorated this month amid concerns over a U.S. recession and the stock market crash.

Inflation expectations remained flat this month compared to the previous month.

This month, ordinary people expected consumer prices to rise 2.9 percent for the year ahead, unchanged from the previous month's reading.

The reading marks the lowest since March 2022, when the comparable figure was 2.9 percent, according to the BOK.

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.

The country's inflation picked up pace in July on high prices of fruits and petroleum products, though it stayed below 3 percent for the fourth consecutive month.

Consumer prices, a key gauge of inflation, rose 2.6 percent on year last month, compared with a 2.4 percent increase a month earlier, according to the data from Statistics Korea.

It was the first time in six months that the price growth accelerated.

Last month, the country's central bank froze its key rate for the 12th straight session at 3.5 percent amid moderating inflation and high household debts.

The rate freezes came after the BOK delivered seven consecutive rate hikes from April 2022 to January 2023.

Yonhap