Effect of livelihood coupons… September consumer sentiment 'solid'

Over 110 for 3 consecutive months for the first time in 7 years

Consumers' expectations about the economy remained at a high level for three consecutive months. Analysts say expectations surrounding the new government's inauguration and the distribution of consumer coupons, which have stimulated domestic demand, are influencing this.

According to the 'Consumer Sentiment Survey' released by the Bank of Korea on the 24th, the September consumer sentiment index (CCSI) was 110.1. It fell 1.3 points from August (111.4), which recorded the highest level in 7 years and 7 months, but still remained above 110.

The consumer sentiment index being at or above 110 for three consecutive months is the first time in about 7 years since October 2017–January 2018. A CCSI above 100 means that consumer sentiment is optimistic compared with the long-term average (2003–2024), while below 100 means pessimistic.

Recently, the consumer sentiment index plunged by 12.5 points in December last year due to emergency martial law, then fluctuated and showed a five-month consecutive rise from April to August this year. It slipped slightly this month, but high levels above 110 have continued since July. Lee Hye-young, head of the Bank of Korea's Economic Sentiment Survey Team, explained, "Many consumers still make optimistic judgments more often."

Many interpret the high consumer sentiment as largely due to the effect of the new government's inauguration. Expectations about policies have driven the KOSPI sharply higher, and the distribution of consumer coupons has stimulated domestic demand, leading to improved consumer sentiment. This month's slight weakening appears to be due to weak construction activity and delays in reaching a tariff agreement with the United States.

The team leader said, "As uncertainty increased, concerns about the future economy emerged."

Reporter Kang Jin-gyu josep@hankyung.com