Consumer sentiment hits 5-month low in July

Korean consumers’ confidence fell to a five-month low in July as the economic outlook became bleaker due to the eurozone debt crisis, the central bank said Wednesday.

The consumer sentiment index ― a gauge of consumers’ overall economic outlook, living conditions and future spending ― came in at 100 for July, down from 101 tallied in the previous month, according to a survey by the Bank of Korea.

The July data marked the lowest level since the index reached an identical 100 in February, the bank said. The sentiment index is widely used as a gauge of future private spending.

A reading below the benchmark 100 means pessimists outnumber optimists. The survey, based on a poll of 2,050 households in 56 cities nationwide, was conducted from July 11-18.

The data came as the BOK cut its 2012 growth outlook on July 13 to 3 percent from its earlier estimate of 3.5 percent, citing growing downside risks to growth stemming from the eurozone debt crisis.

The central bank delivered a surprise rate cut to 3 percent on July 12, underscoring its urgency to shield the local economy from bitter impacts of the eurozone debt problems.

Citing falls in oil prices, the BOK also cut its 2012 inflation projection to 2.7 percent from its previous estimate of 3.2 percent. The BOK aims to keep its median inflation target at 3 percent for 2010-2012.

Korean consumers in July forecast that inflation would reach an annual average of 3.6 percent over the next 12 months, slightly down from 3.7 percent estimated in the previous month, according to the bank.

The growth of Korea’s consumer prices slowed to the 2 percent range for the fourth straight month in June.

The sub-index measuring consumers’ economic growth outlook stood at 81 for this month, unchanged from the previous month and the index gauging consumers’ assessment of current economic conditions reached 71 for July, down from 74 in June.

The index gauging consumers’ projections for interest rates came in at 105 for this month, down from 107 tallied in the previous month, indicating that consumers expect the central bank to cut the key rate further down the road. (Yonhap News)