South Korea’s consumer sentiment rebounded in October as eased inflation and hopes for a rate cut may boost domestic demand, a central bank poll showed Wednesday.

The composite consumer sentiment index stood at 101.7 this month, up from the previous month’s 100, according to the survey conducted by the Bank of Korea (BOK).

A reading above 100 means optimists outnumber pessimists.

The central bank said consumer sentiment was boosted this month amid hopes that moderated inflation and the central bank’s potential rate cut may help private spending recover.

Earlier this month, the BOK cut its key interest rate by a quarter percentage point to 3.25 percent, ending its yearslong restrictive policy amid moderating inflation and faltering domestic demand.

The central bank has been implementing a restrictive mode as it delivered seven consecutive hikes in borrowing costs from April 2022 to January 2023 to tame soaring inflation in Asia’s fourth-largest economy.

Inflation expectations remained unchanged this mont
h compared with the previous month.

This month, ordinary people expected consumer prices to rise 2.8 percent for the year ahead, unchanged from September.

The figures are closely watched, as their upward move could cause businesses to raise prices and people to ask for pay raises, thereby resulting in more upward pressure on inflation going forward.

Source: Yonhap News Agency