South Korea’s consumer confidence has deteriorated sharply on fears of inflation and rising interest rates

The Bank of Korea’s (BOK) consumer confidence index fell 10.4 points to 86 in July, the sharpest decline since COVID-19 began, as a sharp rise in inflation and rising interest rates forced consumers to cut spending.

An index below 100 indicates that the number of consumers with a negative outlook on the economy outnumbers those with a positive outlook.

The BOK raises interest rates by 0.50% at its meeting this month. This is a record rate hike to curb inflation. It will probably raise rates again in the coming months, although the BOK is concerned that this will hurt the economic outlook.

According to the BOK, the index of household confidence in the economy fell to 50 in July, the lowest level since the global financial crisis in 2008.

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