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Consumer Sentiment Rebound Pauses, Inflation Expectations Steady In August

SOUTH KOREA

The recovery in South Korean consumer sentiment paused in August. The headline index eased back to 103.1, from 103.2 in July. Still, we are comfortably off recent cyclical lows, and the index is still suggesting an improved y/y GDP backdrop as we progress through H2, see the first chart below.

  • The main headwind that appeared in August was sentiment around the domestic economy, which dipped to 80 from 84. Spending plans remain around recent highs though.

Fig 1: South Korean Consumer Sentiment & GDP Y/Y

Source: MNI - Market News/Bloomberg

  • On the inflation front, the expected inflation level in 12 months time was unchanged at 3.3%. The rate of decline in inflation expectations has slowed in recent months. There is now a reasonable wedge between this metric and headline y/y CPI, see the chart below.
  • Expected wages were steady at 118, although house price expectations rose to 107 from 102.

Fig 2: Consumer Inflation Expectations - Easing Trend Paused in August

Source: MNI - Market News/Bloomberg

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