Consumer sentiment slipped for the first time in a month as a sharp stock market sell-off was compounded by the prolonged conflict in the Middle East. Indexes gauging the outlook for the economy and household finances all fell together. Expectations of rising home prices eased a little but remain well above the long-term average.
According to the "October 2026 Consumer Survey results" released by the Bank of Korea on the 27th, this month's Composite Consumer Sentiment Index (CCSI) was 105.4, down 1.2 points from September. It reversed course after rising 2.1 points the previous month. A reading above 100 means sentiment is more optimistic than the long-term average (2003-25).
The BOK said, "The index fell slightly as pessimistic economic forecasts increased somewhat owing to the domestic stock market correction and the ongoing conflict in the Middle East." During the survey period of the 13th to the 20th, the KOSPI plunged more than 5% on the 13th alone, and on the 20th it fell 3.73% to the 5,500 level amid spreading worries over the sustainability of artificial intelligence (AI) investment and China's chase in semiconductors. The index, which stood around 6,800 at the start of the month, has thus retreated sharply.
Growth expectations continue to rise on strong semiconductor exports, but the recovery in consumer sentiment is faltering. At a press conference on monetary policy on the 22nd, BOK Governor Shin Hyun-song said this year's and next year's growth forecasts would be raised considerably from the 3.3% and 2.9% in the August economic outlook. The Organization for Economic Cooperation and Development (OECD) also raised its forecast for Korea's growth this year by 1.1 percentage points to 3.7% in September.
The decline was led by forward-looking indexes. The current living conditions CSI rose 1 point to 93, while the living conditions outlook (97), household income outlook (101) and consumption expenditure outlook (109) each fell 1 point, and the outlook for the economy (88) fell 2 points. The BOK analyzed that the stock market correction and growing uncertainty in the Middle East pulled down the economic outlook even though export growth is steep.
The employment opportunity outlook CSI (86) also fell 2 points on speculation that the semiconductor cycle could turn down and worries over the impact of AI technology on jobs. The current household savings CSI (93), household savings outlook CSI (98) and wage level outlook CSI (122) also each fell 2 points.
Park Yong-min, head of the BOK's economic sentiment survey team, diagnosed that worries over the semiconductor cycle weighed negatively on consumer sentiment overall this month, saying, "Concerns about a possible slowdown in the semiconductor cycle also link to falling stock prices but also affect economic judgments, and if the economy worsens it could affect employment and wages."
The housing price outlook CSI fell 1 point to 124. Apartment prices in the Seoul metropolitan area, including non-Gangnam Seoul and Gyeonggi, continued to rise, but government real estate measures and rising benchmark interest rates weighed on the index. It has been easing gradually since peaking at 127 in July, but remains 17 points above the long-term average (107).
The inflation expectation rate for the next year was 2.7%, unchanged from September. The BOK explained that upward factors such as rising international oil prices and downward factors such as the extension of the petroleum price cap and the benchmark rate hike operated together. As items expected to push up prices over the next year, petroleum products (52.6%) were cited most often, followed by agricultural, livestock and fishery products (36.0%) and public utility charges (30.4%). Housing rent was chosen by 22.6% of respondents, up 1.6 percentage points from a month earlier, the biggest increase of any item.
The BOK conducted the survey on the 13th to 20th among 2,500 households in cities nationwide, and 2,238 households responded.