The Bank of South Korea (BOK) has disclosed the findings of its recent survey, revealing that the nation’s Consumer Confidence Index for April 2024 stands at 100.7, unchanged from the previous month. This index, indicative of consumers’ perceptions of the economy, remains above 100, signaling a prevailing positive sentiment among consumers.
The BOK highlighted that the stability in the consumer confidence index comes amidst challenges posed by elevated prices of agricultural products and high interest rates. Despite these factors, consumers in April anticipate a slight moderation in inflation for the coming year, with expectations pegged at 3.1%, down marginally from 3.2% in March.
Notably, consumer inflation expectations hold significant weight for the BOK, as they serve as crucial indicators of potential future economic trends. An upward trajectory in these expectations could prompt businesses to raise prices and workers to demand higher wages, thereby exacerbating inflationary pressures down the line.
South Korea witnessed its inflation rate surpassing 3% for the second consecutive month in March, driven by record-high fruit prices and the upward trend in global oil prices. The Consumer Price Index (CPI) recorded a year-on-year increase of 3.1% in March, closely mirroring February’s level of 3.2%.
Against this backdrop, the BOK opted to maintain the policy interest rate at 3.5% for the 10th consecutive month in April. This decision follows a series of seven consecutive interest rate hikes implemented from April 2022 until January 2023, aimed at curbing inflationary pressures.