Higher prices, falling stocks dent consumer sentiment

A 33-year-old office worker in Yeouido, Seoul, surnamed Choi, has increasingly turned to her office cafeteria for lunch, as the rising cost of eating out has become burdensome.

"I spend about 15,000 won ($11) on lunch when I eat out, but the office cafeteria costs about half as much," she said.

Instead of traveling overseas this summer, Choi took a three-day trip to Goseong, Gangwon Province, opting for a domestic trip to keep costs down as her stock portfolio has made her more cautious about spending.

"I've been in the red for several months. Every time I look at my stock app, I feel more reluctant to spend money on meeting friends or buying new clothes," she said.

Choi's experience reflects a broader shift in consumer sentiment in Korea, as rising prices and stock market volatility weigh on household spending.

According to data released by the Bank of Korea (BOK), Tuesday, the Composite Consumer Sentiment Index (CCSI) stood at 104.5 in August, down 2.3 points from the previous month.

The index had risen for three consecutive months from May, before reversing course in August.

A reading above 100 indicates that consumer sentiment is more optimistic than the long-term average from 2003 to 2025, while a reading below 100 indicates pessimism.

"Despite favorable real economic conditions, consumer sentiment declined for the first time in four months as the stock market correction and cumulative price increases weighed on consumer sentiment," a BOK official said.

"Although consumer inflation slowed in July, persistently high prices of everyday goods continued to weigh on consumers' perceptions of the economy," the official added.

The CCSI is calculated based on six sub-indexes, including current living conditions, future living conditions, household income outlook, consumption spending outlook, current economic assessment and future economic outlook.

Among the sub-indexes, the current economic assessment index fell 5 points to 79 in August. The index had risen from 68 in April to 83 in May and 86 in June, before edging down to 84 in July.

The BOK attributed the downward trend to increased volatility in the stock market, which led more consumers to take a pessimistic view of current economic conditions.

The benchmark KOSPI, which surpassed the 9,000 mark in June, has since retreated sharply and is now hovering around 6,500.

Prices of everyday goods, including dining-out meals, have continued to rise, adding to pressure on household budgets.

According to data from the Korea Consumer Agency, the average price of samgyetang, a Korean ginseng soup featuring chicken stuffed with rice that is popular in the summer, rose to 18,192 won in July from 18,154 won the previous month.

The average price of naengmyeon (cold noodles) also increased to 12,692 won from 12,615 won, while the price of gimbap (rice and fillings rolled inside seaweed), long considered an affordable staple, rose to 3,869 won from 3,838 won.