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/Yonhap

Consumer sentiment in South Korea fell again after a one-month rebound, weighed down by a correction in the domestic stock market and continued conflict in the Middle East. Despite strong export growth, expectations for future economic conditions weakened. The employment outlook also deteriorated amid concerns over a potential slowdown in the semiconductor industry and the impact of advances in artificial intelligence (AI) on employment.

According to the Bank of Korea's (BOK) October 2026 Consumer Survey, released on Oct. 27, the composite consumer sentiment index (CCSI) stood at 105.4 this month, down 1.2 points from 106.6 in September. The index had fallen to 104.5 in August before rebounding to 106.6 in September, but returned to a downward trend after just one month.

The CCSI is calculated based on six indicators: current living conditions, outlook for living conditions, household income expectations, consumer spending expectations, assessment of current economic conditions, and outlook for future economic conditions. A reading above the long-term average of 100 indicates that consumer sentiment is more optimistic than its historical average.

Expectations for household income and consumer spending also weakened. The CSI for household income expectations fell 1 point from the previous month to 101, reportedly affected by falling stock prices and rising interest rates. The CSI for consumer spending expectations also declined 1 point to 109, while the CSI for the outlook for living conditions dropped 1 point to 97. In contrast, the CSI for current living conditions rose 1 point to 93.

Perceptions of economic conditions also deteriorated. The CSI for current economic conditions fell 1 point from the previous month to 82, while the CSI for future economic conditions declined 2 points to 88. The BOK attributed the weakening outlook to growing pessimism over the economy amid a domestic stock market correction and heightened uncertainty in the Middle East, despite strong export growth.

The employment outlook also worsened. The CSI for employment opportunities fell 2 points from the previous month to 86, reflecting concerns over a potential slowdown in the semiconductor industry and the impact of advances in AI technology on employment. The CSI for wage expectations also declined 2 points to 122.

The CSI for housing price expectations stood at 124, down 1 point from the previous month. After reaching 127 in July, the index fell to 125 in August, remained unchanged in September and declined again this month. According to the BOK, although apartment prices continued to rise in the Seoul metropolitan area, including non-Gangnam districts of Seoul and Gyeonggi Province, government real estate measures and increases in the key interest rate contributed to the decline in expectations.

By region, Seoul's CSI for housing price expectations fell 3 points from 133 in September to 130 in October. The index declined 1 point from 121 to 120 in the six major metropolitan cities and from 124 to 123 in other regions. However, the nationwide CSI for housing price expectations remained well above its long-term average of 107, indicating that expectations for rising home prices remained elevated.

The CSI for interest rate expectations, which measures expectations for interest rates six months ahead, fell 1 point from the previous month to 127. Expected inflation over the next year remained unchanged at 2.7%. Although rising international oil prices exerted upward pressure on inflation, the extension of the petroleum price ceiling system and increases in the key interest rate acted as downward factors.

Petroleum products were the most frequently cited items expected to affect inflation over the next year, selected by 52.6% of respondents. They were followed by agricultural, livestock and fishery products at 36.0% and public utility charges at 30.4%. Compared with the previous month, the proportions of respondents citing housing rents and personal services increased by 1.6 percentage points and 1.2 percentage points, respectively.

                                                                                                                Park Seo-a