Consumer sentiment improves for 2nd straight month on semiconductor exports; housing price outlook returns to January level

By Kim Byeo-ri, The Herald Business

South Korea's consumer sentiment index improved for a second consecutive month in June, buoyed by strong semiconductor exports and rising share prices. Repeated signals from the Bank of Korea pointing to interest rate hikes pushed the interest rate outlook index to its largest single-month gain since December 2016.

The composite consumer sentiment index (CCSI) came in at 106.6 this month, up 0.5 points from the previous month, according to the Bank of Korea's June 2026 consumer survey released Tuesday. The index had fallen for two consecutive months in March and April amid the fallout from the Iran war, before rebounding last month on semiconductor-led export strength and a stock market rally — a recovery that extended into June.

"Consumer sentiment improved for two consecutive months as optimism grew on the back of strong exports and higher share prices, even as rising inflation dampened the public's sense of economic conditions," said Lee Heung-hu, head of the Bank of Korea's economic sentiment survey team. He added that sentiment had not fully recovered to pre-Middle East war levels due to high inflation and a weak won, but that the overall economic outlook remained more optimistic than the long-term average.

The CCSI is a composite indicator of consumer attitudes toward economic conditions. It is calculated using six sub-indices — current living standards, living standards outlook, household income outlook, consumer spending outlook, current economic assessment and future economic outlook. A reading above 100 indicates that consumer sentiment is more optimistic than the long-term average, while a reading below 100 signals pessimism.

On the outlook for next month, Lee said the key factors shaping consumer sentiment would be how quickly energy supply chains in the Middle East normalize following the US-Iran ceasefire agreement, how that affects prices, and the trajectory of the global IT sector.

Among the major sub-indices, the current economic assessment CSI rose 3 points to 86, supported by semiconductor-led export gains and higher share prices.

The future economic outlook CSI slipped 1 point to 92. Despite hopes surrounding the end of the Middle East war, concerns about rising lending rates and elevated stock valuations weighed on sentiment.

The interest rate outlook CSI rose 12 points, driven by expectations of a benchmark interest rate hike and rising market rates. That is the largest monthly gain since December 2016, when it also climbed 12 points, and is particularly notable given that interest rates were also rising in 2021. Lee attributed the sharp move to the Bank of Korea's repeated signals of rate hikes, which he said had shaped consumers' policy expectations amid persistently high inflation and a weak exchange rate stemming from the Middle East war.

The housing price outlook CSI rose 8 points to 120, as apartment purchase and jeonse prices accelerated in Seoul and Gyeonggi Province. The index had fallen from 124 in January to 96 in March before climbing for two consecutive months to return to its early-year level. Lee said widening price gains in Seoul and Gyeonggi Province apartment markets, combined with the semiconductor sector's strong performance and bonus payments in the IT industry, appeared to have contributed to the rise.

The one-year ahead expected inflation rate — a measure of consumers' price outlook over the next 12 months — held steady at 2.8 percent, unchanged from the previous month. Upward pressure from broader consumer price gains and a weak exchange rate was offset by expectations of a ceasefire in the Middle East war and anticipated monetary tightening. The three-year ahead expected inflation rate rose 0.1 percentage point to 2.7 percent, while the five-year ahead figure was unchanged at 2.6 percent.