By Yoon Ja-young
Staff Reporter
Consumer confidence fell to the lowest level in seven years and seven months amid an ailing economy squeezed by inflation and stock market turmoil. There doesn't seem to be a positive sign as consumers are likely to tighten spending following an interest rate hike.
According to the National Statistical Office (NSO), the consumer expectation index, which reflects consumer outlook on the economy and living conditions six months ahead, recorded 84.6 in July, falling from 86.8 a month earlier. It is the lowest level since December 2000 when it marked 81.6. A reading above 100 indicates that more people expect things to get better after six months, while a mark below 100 shows more people are pessimistic. The index once hovered above 100 in April, but has been falling for three months in a row.
The index fell from the previous month in all age and income groups. The plunge was especially notable among the low-income group and those in their 30s, 40s, or 50s. Those earning less than 1 million won a month saw the index fall by 3.5 points, while the index fell only 1.8 points among those making over 4 million.
The consumer evaluation index, which compares the current economy and living conditions with those six months ago, fell to 59.2, down 2.1 from June. It is the lowest since December 1998 when the statistical office started compiling such data.
The asset evaluation index, which asks consumers to compare the value of their assets from six months ago, fell in all categories. The indices marked below 100 for real estate, savings, and stocks and bonds, reflecting the recent stock market plunge and the collapse of a bubble in the real estate market.
An index comparing household income with that of a year ago recorded 89.3, falling 3 points from a month ago.
According to the survey, consumers regard inflation as the biggest concern ― over 80 percent picked consumer prices, including oil prices, as the biggest influence on the economy, followed by exports and foreign exchange rate and domestic consumption. .
``Overall inflation seems to have negatively affected the consumer sentiment,'' said a spokesman at the NSO.
The Ministry of Strategy and Finance said a vicious circle of sluggish domestic economy, poor consumer sentiment, and consumption contraction is being formed, showing concern that things aren't likely to get better for the working class.
The interest rate raise is expected to hamper consumption further.