SEOUL (Reuters) - South Korean consumers were in their most pessimistic mood in 31 months in August, while their inflation expectations fell to an all-time low, an official survey found on Tuesday, reinforcing expectations for a further interest rate cut.
The central bank said in a statement that the composite consumer sentiment index from its survey fell to 92.5 in August from 95.9 in July, marking the lowest since January 2017 and the second lowest since the 2008-2009 global financial crisis.
A reading below 100 means consumer sentiment is weaker than a long-term average, which currently covers 2003-2018, the central bank said.
Sentiment worsened in all six sub-categories as the U.S.-China trade war continued, global trade cooled and local economy slowed further.
Consumers’ median inflation expectation for the next 12 months, compiled from the same survey, inched down to 2.0% in August, the lowest since the data was first released in February 2002.
Consumer price inflation stood at 0.6% in July in annual terms, far short of the central bank’s 2% target and below this year’s projection of 0.7%.
The central bank cut its policy interest rate by 25 basis points to 1.50% at its July meeting, a surprise move that marked its first reduction in three years.
It next reviews policy on Friday this week. Economists at OCBC said on Monday there is an outside chance the Bank of Korea could surprise by cutting rates again, given a sharp escalation in the U.S.-China trade war in the last few days.
Reporting by Joori Roh; Editing by Choonsik Yoo