South Koreans appear to be cutting spending despite a more optimistic economic outlook on living conditions.
South Korea’s consumer sentiment index (CSI) rose three points on-month from 99 in December to 102 in January this year, indicating an optimistic sentiment about the economy, according to data released by the Bank of Korea on Sunday. The reading is the highest since May last year when it reached 106. A CSI reading below 100 indicates a pessimistic sentiment.
The CSI for living conditions outlook for the second half of the year jumped three points month-on-month to 96, the highest since the 98 recorded in May 2012, suggesting that living conditions would improve in the second half of this year.
But the CSI gauge for private consumption, including costs of travel, dining, apparels, entertainment and cultural activities, education, transportation and telecommunications, fell to its lowest since April last year, implying that consumers are willing to cut spending even if their living conditions improve.
Consumers would hold back spending on traveling first, as indicated by a low CSI of 82. The gauge for cost of travel has been on the wane since April last year.
The CSI reading for dining remained unchanged from last month at 87, but dropped seven points compared to that of April last year.
Consumers are also expected to forgo spending on entertainment and cultural activities, which fell to 89, six points down from April last year.
The reading for spending on apparel declined from 104 of April last year to 97 in January this year.
South Koreans are likely to spend more on education (106), medical and health care (110), and transportation and communications (113), the data revealed. The readings in the three areas fell seven to eight points compared to those of April last year.