Consumer Sentiment Falls Again After a One-Month Rebound... "Pessimistic Outlook Grows as Stock Prices Decline"

October CCSI at 105.4...Down 1.2 Points
Impacted by Stock Market Decline and Continued Clashes in the Middle East
Potential Semiconductor Slowdown Also Weighs on Sentiment
Housing Price Outlook CSI Falls to 124...Still Above the Long-Term Average

The Consumer Sentiment Index (CCSI) fell again after rising for a month. Strong semiconductor exports are helping to improve consumer sentiment on a fundamental basis, but pessimism about the economic outlook has increased amid a correction in the domestic stock market and continued clashes in the Middle East.

October CCSI at 105.4...Down 1.2 Points from Previous Month

According to the "October 2026 Consumer Survey" released by the Bank of Korea on October 27, the CCSI fell 1.2 points from the previous month to 105.4.

The CCSI is a sentiment indicator that provides an overall picture of consumers' perceptions of economic life. It is calculated using six major Consumer Survey Index (CSI) components, including current living conditions, household income outlook and spending outlook. The long-term average, from January 2003 to December 2025, is set at 100. A reading above 100 indicates greater optimism than the long-term average, while a reading below 100 indicates greater pessimism.

The CCSI fell below 110 in March this year amid the effects of the war in the Middle East, then dropped to 99.2 in April as concerns over energy supply disruptions, rising prices and an economic slowdown converged. It later rebounded to above 106 last month as hopes for an end to the war in the Middle East revived, stock prices surged and semiconductor exports remained strong. This month, however, it retreated to the 105 range. Park Yongmin, head of the Economic Sentiment Survey Team at the Bank of Korea's Economic Statistics Department 1, said, "The index edged down as pessimism about the economic outlook increased amid a correction in the domestic stock market and continued clashes in the Middle East."

Stock Price Declines Affect Consumer Sentiment Broadly

The KOSPI fell into the 5,400-point range amid extreme volatility this month, correcting by more than 20% from the end of September. This movement in stock prices affected not only perceptions of economic conditions but also the outlook for household finances.

The Current Economic Conditions CSI fell 1 point from the previous month to 82. The Forward-Looking Economic Conditions CSI, which measures expectations for conditions six months ahead compared with the present, also declined by 2 points to 88. The Household Income Outlook CSI (101) and the Consumer Spending Outlook CSI (109) each fell 1 point, also reflecting the effects of falling stock prices and rising interest rates.

Falling stock prices also affected the Current Household Savings CSI, which fell 2 points to 93, and the Future Household Savings CSI, which also dropped 2 points to 98.

Asked why consumer sentiment had declined despite a strong semiconductor export boom, Park said, "Semiconductor exports are growing to exceptionally high levels, which is acting as a fundamental factor supporting sentiment." He added, "However, other factors had a greater impact and pulled the index down, including falling stock prices, continued clashes in the Middle East and rising interest rates. The decline was not large."

"Concerns Also Emerge over Semiconductor Slowdown and AI Replacing Jobs"

The survey also found that concerns about a possible slowdown in the semiconductor industry and the possibility of AI replacing workers broadly affected assessments of the economic outlook, as well as employment and wage expectations.

The Employment Opportunities Outlook CSI fell 2 points to 86, approaching its long-term average of 85. The Wage Level Outlook CSI also fell 2 points to 122. Park said, "Concerns about a possible slowdown in the semiconductor industry and whether the boom will continue are reflected not only in falling stock prices but also in assessments of economic conditions. Naturally, this has also affected employment and wage expectations."

The Housing Price Outlook CSI fell 1 point from the previous month to 124, reflecting the effects of the government's real estate measures and a benchmark interest rate hike. After falling from 127 in July to 125 in August, it has since held steady or continued to decline, but remains well above its long-term average of 107. By region, Seoul recorded the highest reading at 130, while the six major metropolitan cities and other regions posted 120 and 123, respectively. Compared with the previous month, Seoul fell 3 points, while the six major metropolitan cities and other regions each declined by 1 point. Park said, "Continued apartment price increases in non-Gangnam areas of Seoul and in Gyeonggi and other parts of the capital region are acting as an upward factor."

Expected inflation over the next year, which measures consumers' outlook for price increases over the coming year, stood at 2.7%, unchanged from the previous month. Expected inflation three and five years ahead also remained at 2.6%, the same as last month. Park said, "The continued rise in international oil prices is acting as an upward factor, while the extension of the oil price cap and the benchmark interest rate hike are acting as downward factors. This appears to have kept the reading at the previous month's level."

The survey was conducted from October 13 to 20 among 2,500 households in cities nationwide, of which 2,238 responded.

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