Korean consumer sentiment rebounds in September

South Korea’s consumer sentiment rebounded in September after falling a month earlier, supported by improving expectations for household income as the real economy remained on a solid footing and stock market volatility eased.

According to the Bank of Korea (BOK) on Wednesday, the country’s composite consumer sentiment index (CCSI) stood at106.6 in September, up 2.1 points from August.

The index had risen for three straight months from May on strong semiconductor exports before falling 2.3 points in August. September’s increase was the largest since May and brought the index back to its June level.

The CCSI has remained above 100 for five consecutive months since April. A reading above 100 indicates that consumer sentiment is more optimistic than its long-term average for 2003-2024.

Among the six components of the CCSI, the current domestic economic conditions index posted the largest gain, rising 4 points to 83, its highest level in two months. The improvement reflected continued strength in exports and consumption, as well as reduced stock market volatility.

Consumer sentiment related to future household income rose 2 points to 102, its highest since February, as expectations for better income conditions strengthened on an improving growth outlook.

The outlook for living standards rose 1 point to 98, while the household spending outlook and future domestic economic conditions outlook each increased 1 point to 110 and 90, respectively.

The current living standards index was unchanged at 92.

The housing price outlook remained elevated at 125, unchanged from August. The BOK said real estate policy measures and the recent base-rate hike offset upward pressure from rising apartment prices in the Seoul metropolitan area.

The index had climbed for four consecutive months through July to reach 127, its highest since September 2021, before easing by 2 points in August.

“Expectations for further price increases remain high, given the strong upward trend in housing prices in the Seoul metropolitan area,” said Park Yong-min, head of the division responsible for the economic sentiment survey at BOK.

The index stood at 133 in Seoul, compared with the mid-to-high 120s in the six major metropolitan cities and other regions.

The interest-rate expectations index rose 3 points to 128, its highest since October 2023. It jumped 12 points in June following the BOK’s benchmark rate hike, before easing slightly in August and rising again this month.

The current household debt index rose 1 point to 101, its highest since December 2024.

Consumers’ one-year inflation expectations were unchanged at 2.7 percent. Park said upward pressure from higher international oil prices following renewed conflict in the Middle East was offset by expectations of continued monetary tightening and a stronger won against the U.S. dollar.

Park said strong semiconductor exports had boosted capital investment, which in turn supported consumption and household income conditions.

But he cautioned against assuming the improvement in consumer sentiment would continue, citing uncertainties including stock market conditions and the war in the Middle East.