SEOUL: South Korea’s consumer sentiment has shown signs of recovery in October, fueled by hopes for a rate cut and eased inflation, according to a poll conducted by the central bank. The survey revealed that the composite consumer sentiment index climbed to 101.7 this month, marking an increase from September’s reading of 100.
According to Yonhap News Agency, the Bank of Korea (BOK) attributed the rise in consumer sentiment to moderated inflation and the possibility of a rate cut, which are anticipated to bolster private spending. Earlier in the month, the BOK reduced its key interest rate by a quarter percentage point, bringing it down to 3.25 percent. This move marked the end of its restrictive policy stance, which had been in place to address soaring inflation in the country’s economy.
The central bank had previously implemented a series of seven consecutive interest rate hikes between April 2022 and January 2023. These measures were aimed at curbing inflation in Asia’s fourth-largest economy. Despite th
e change in monetary policy, inflation expectations among the public remained steady this month, with predictions of a 2.8 percent rise in consumer prices over the next year, the same as in September.
These inflation expectations are significant, as any upward shift could lead businesses to increase prices and workers to demand higher wages, potentially exerting additional upward pressure on inflation in the future. The ongoing stability in these expectations may provide some relief to policymakers as they navigate the complex economic landscape.