South Korea consumer sentiment bounces back in June

PUBLISHED : Thursday, 26 June, 2014, 1:08am
UPDATED : Thursday, 26 June, 2014, 1:08am

South Korea's key measure of consumer sentiment rose in June after a modest fall the previous month, increasing hopes that recovery in domestic consumption is back on track, a central bank survey showed.

The Bank of Korea said its composite consumer sentiment index rose to 107 in June from 105 in May.

The index had slipped in May after staying at 108 for three straight months. The decline in May was blamed mainly on the ferry sinking that killed more than 300 people. Following the tragedy, retail and travel sales softened.

The index's 2.3 point improvement in June, however, fell short of making up May's 3.6 point fall.

A reading above 100 shows that consumers who expect economic and living conditions to improve in the coming month outnumber those who expect them to deteriorate.

The index was last below 100 in December 2012. At 79, the sub-index for sentiment towards the current economy, which asks respondents' to compare current economic situations from six months before, was a little better than May's 76, but still way off the 91 recorded in April.

Sentiment towards the economy six months from June fared better however, rising to 98 this month from 94 in May.

The sub-index had hit a 31/2 year high in March with a reading of 102.

The Bank of Korea also said that South Koreans' median inflation expectation for the next 12 months remained unchanged at 2.8 per cent in June from the previous month.

A majority of survey respondents said public utility prices were expected to pressure them the most over the next 12 months, followed by industrial goods and housing.

The survey results precedes June inflation data, which is expected to accelerate from a 19-month high of 1.7 per cent seen in May.

The central bank surveyed roughly 2,000 households nationwide from June 11 to 18