Screenshot of a Bank of Korea press release

The Composite Consumer Sentiment Index (CCSI) for December fell by 2.5 points month-on-month, marking the largest decline in the past year. Consumer sentiment, which had rebounded last month, has returned to a downward trend after just one month due to the combined burden of exchange rates and prices.

According to the 'December Consumer Trend Survey' released by the Bank of Korea on the 24th, the CCSI stood at 109.9, a decrease of 2.5 points from the previous month (112.4). This represents the largest monthly drop since the end of last year. While the index remains above the long-term average of 100, the trend has clearly shifted downwards.

The decline was primarily driven by economic perception indicators.

The current economic assessment index fell by 7 points and the future economic outlook index by 6 points compared to the previous month, accounting for the majority of the overall index decline. In contrast, the household income outlook (-1 point) and the living conditions outlook (-1 point) saw relatively limited decreases, while the consumption expenditure outlook index remained unchanged from the previous month.

This suggests that while consumers' perception of the current economic environment has sharply worsened, their actual spending plans have not yet contracted. This indicates that the psychological contraction remains in its initial stage.

The burden of prices and exchange rates is also confirmed by the figures.

The living price outlook index rose, and the expected inflation rate for the next year remained at 2.6%, the same as the previous month. However, it is assessed that it is difficult to say that the perceived price burden has eased. In particular, the Bank of Korea analyzed that the widening volatility of the won-dollar exchange rate had a direct impact on the economic outlook index.

In contrast to consumer sentiment, expectations for asset prices were mixed.

The housing price outlook index rose to 121, up from the previous month, continuing a trend where consumption and asset expectations are diverging. This demonstrates that while consumers are responding defensively to the current consumption environment, expectations for medium- to long-term asset prices are still being maintained.

Further observation is needed to determine whether this decline in the index is a short-term adjustment or a signal of a trend reversal. However, given that the decline, which largely reversed last month's rebound, occurred within a single month, analyses suggest that the recovery of consumer sentiment has not yet entered a stable trend.

※ Consumer Trend Survey

The Consumer Trend Survey is a monthly survey conducted by the Bank of Korea targeting households nationwide. It calculates the Composite Consumer Sentiment Index (CCSI) by comprehensively assessing current economic perceptions, future economic outlook, and expectations for household income, consumption expenditure, and housing prices. The CCSI, with 100 as a benchmark, indicates more optimistic consumer sentiment than the long-term average if above 100, and more pessimistic sentiment if below 100. The index tends to lead actual consumption and is used as a key reference indicator for gauging future domestic demand trends.

By Reporter Kim Young