KOSPI

South Korea Consumer Sentiment Edges Up in July as Inflation Expectations Ease

South Korea's consumer sentiment edged higher in July as households grew slightly more optimistic about their future income and living standards, while one-year inflation expectations eased.The Composite Consumer Sentiment Index rose to 106.8 in July from 106.6 in June, the Bank of Korea survey data showed Tuesday.Consumer sentiment on current living standards slipped to 93 from 94, while expectations for future living standards improved to 98 from 97.Expectations for future household income also increased to 101 from 100, while those for future household spending were unchanged at 110.Sentiment on current domestic economic conditions fell to 84 from 86, while expectations for future economic conditions held steady at 92.One-year ahead inflation expectations eased to 2.7% from 2.8% in June. Three-year ahead inflation expectations also declined to 2.6% from 2.7%, while five-year ahead expectations were unchanged at 2.6%.The survey follows the Bank of Korea's decision earlier this month to raise its benchmark interest rate by 25 basis points to 2.75%, the first increase since January 2023, citing stronger economic growth, persistent inflationary pressures and financial stability risks.The central bank said exports and investment, driven by the semiconductor sector, continued to support the economy, while consumption showed signs of strengthening."Inflation is forecast to remain above the target level for a considerable time, as elevated cost pressures persist and demand-side pressures also gradually increase," the Bank of Korea said.The central bank expects consumer inflation to remain above its 2% target despite easing global oil prices, as elevated costs, a weaker won and strengthening domestic demand continue to support price pressures.