"Middle East War Fallout" Consumer Sentiment Plummets... Largest Drop Since Martial Law

High Oil Prices and Inflation Concerns from Middle East Crisis Drive Economic Slowdown Worries

Real Estate Regulations and Increased Properties for Sale... Housing Price Outlook CSI Down 12 Points

The Consumer Composite Sentiment Index (CCSI) for March fell by 5.1 points compared to the previous month. This marks the largest decline since December 2024, when there was a drop of 12.7 points during the imposition of martial law. The decline is attributed to an increase in negative economic sentiment, driven by concerns over rising prices due to the Iran war, fears of an economic slowdown, and heightened volatility in financial markets.

According to the "March 2026 Consumer Survey Results" released by the Bank of Korea on the 25th, this month’s CCSI registered at 107.0, down 5.1 points from the previous month. The CCSI is a sentiment indicator that comprehensively reflects consumers’ perceptions of the economy. It is calculated using six major indices that comprise the Consumer Sentiment Index (CSI), including current living conditions, household income outlook, and consumption expenditure outlook. The long-term average (from January 2003 to December 2025) is set as the baseline at 100; a reading above 100 indicates optimism relative to the long-term average, while a reading below 100 suggests pessimism.

Despite Strong Exports, Economic Sentiment Deteriorates Due to Middle East Risks... Future Economic Outlook CSI Drops 13 Points

Sentiment regarding the current economic situation has worsened compared to last month, despite robust export performance. The expansion of uncertainty due to the Middle East war, concerns over rising prices and economic slowdown stemming from high oil prices and supply chain disruptions, have intensified negative views. The Current Economic Assessment CSI (86), which compares to six months ago, and the Future Economic Outlook CSI (89), which projects the situation six months from now, fell by 9 points and 13 points respectively compared to the previous month. The Employment Opportunity Outlook CSI (89) dropped by 4 points, while the Interest Rate Outlook CSI (109) rose by 4 points compared to the previous month.

This month, as stock indices and exchange rates fluctuated dramatically and financial volatility increased, household sentiment toward savings also weakened slightly. The Current Household Savings CSI was 97, down 3 points from last month’s record high, returning to a level similar to December last year. The Current Household Savings CSI reflects perceptions of savings and investment status in bank deposits, installment savings, stocks, and funds compared to six months ago. The Household Savings Outlook CSI (100), which projects six months ahead, also dropped by 2 points from the previous month. The Current Household Debt CSI (99) remained unchanged from the previous month, while the Household Debt Outlook CSI (97) rose by 1 point compared to the previous month.

'Real Estate Regulations, Increase in Properties for Sale, and Rising Interest Rates'... Housing Price Outlook CSI Down 12 Points

The Housing Price Outlook CSI (96), which compares the present to one year ahead, fell by 12 points from the previous month, continuing its downward trend. This is the first time in 13 months that the Housing Price Outlook CSI has fallen below 100. Lee Heunghoo, Head of the Economic Sentiment Survey Team at the Economic Statistics Department 1 of the Bank of Korea, said, "The forecasted end of the temporary suspension of the heavy capital gains tax for owners of multiple homes is expected to increase properties for sale and has contributed to rising mortgage interest rates. While housing prices in key areas of Seoul continue to decline, there is still an upward trend nationwide. Therefore, it is necessary to monitor whether government measures, such as financial regulations and tax policies, will lead to a stable trend in the housing market."

The expected inflation rate for the next year (2.7%) and for three years ahead (2.6%) both rose by 0.1 percentage point from the previous month. The expected inflation rate for five years ahead remained unchanged at 2.5%. Regarding the major items expected to influence consumer price inflation over the next year, respondents most frequently cited petroleum products (80.1%), followed by public utility charges (35.6%), and agricultural, livestock, and fisheries products (28.6%).

This survey was conducted from March 10 to 17, targeting 2,500 urban households nationwide, with 2,266 households responding.

This content was produced with the assistance of AI translation services.