Public expects inflation to average at 3.9% over next 12 months: BOK survey
Updated: 2022-06-29 16:41:18 KST
Consumers in South Korea are feeling the pinch from surging prices.
Data published by the Bank of Korea shows that consumers believe inflation will average three.nine percent over the next 12 months
That's the highest consumer prediction in a decade.
It is up point-six percentage points compared to the month before, with figures rising for a fifth month in a row.
An expert said this surge in expected inflation can make inflation last longer due to the so-called "wage-price spiral".
"When the inflation expectations are high the workers demand higher salaries which in turn leads to higher prices the whole situation can get into what we call "wage-price spiral". And that will make inflation higher and longer."
Meanwhile, for the first time in more than a year, consumer sentiment has dropped below one-hundred, meaning there are more pessimists than optimists.
The central bank's Composite Consumer Sentiment Index in June stood at around 96.four, falling six.two points on-month.
The expert explained that the index has dropped below the 100 threshold because inflation has negatively affected people's hopes of economic recovery.
"Just when the pandemic was just about to be over when the recovery was really beginning, you were hit with inflation. And I think that cut people's optimism quite drastically."
As for a possible rate hike by the central bank in July, the expert said this won't be enough to improve the current situation as it is the geopolitical situation abroad that's causing the inflation.