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Consumer Sentiment Index Steady, Inflation Expectations Down Modestly

SOUTH KOREA
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The South Korea April consumer confidence headline was unchanged at 100.7. We are comfortably above mid 2022 lows near 86, although the trend improvement in the headline index has stalled in recent months, which suggests a steady rather than accelerating GDP growth backdrop.

  • In terms of the detail, we didn't see a lot of change to the sub-indices. Some slight improvement in terms of the domestic economy (81 from 80 prior) was offset by slightly lower spending intention plans (110 versus 111 in March).
  • On the prices front, we saw house price expectations jump to 101 from 95 prior, while expected wages also rose a touch to 117, from 116. This measure remains within recent ranges though.
  • Expected inflation eased modestly to 3.1% from 3.2% prior. The chart below overlays this expectations measure against headline CPI y/y.
  • This is a modest improvement, but the trend towards 2% (BoK's inflation target) has stalled to a degree. The BoK is likely to want to be more confident of such trends before easing policy, which is its H2 bias. note the next CPI print, for April, is out on May 2.
Fig 1: South Korea Inflation Expectations Versus CPI Y/Y

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The South Korea April consumer confidence headline was unchanged at 100.7. We are comfortably above mid 2022 lows near 86, although the trend improvement in the headline index has stalled in recent months, which suggests a steady rather than accelerating GDP growth backdrop.

  • In terms of the detail, we didn't see a lot of change to the sub-indices. Some slight improvement in terms of the domestic economy (81 from 80 prior) was offset by slightly lower spending intention plans (110 versus 111 in March).
  • On the prices front, we saw house price expectations jump to 101 from 95 prior, while expected wages also rose a touch to 117, from 116. This measure remains within recent ranges though.
  • Expected inflation eased modestly to 3.1% from 3.2% prior. The chart below overlays this expectations measure against headline CPI y/y.
  • This is a modest improvement, but the trend towards 2% (BoK's inflation target) has stalled to a degree. The BoK is likely to want to be more confident of such trends before easing policy, which is its H2 bias. note the next CPI print, for April, is out on May 2.
Fig 1: South Korea Inflation Expectations Versus CPI Y/Y

Keep reading...Show less