South Korean consumer sentiment remains around its weakest in three-and-a-half years, the central bank said on Wednesday, providing fresh backing for those seeking more cuts in interest rates to support the economy.
The data, released a week before a Bank of Korea rate-setting meeting, showed a majority of consumers planned to cut spending over the next few months, with the index that measures such plans falling to its lowest in nearly four years.
The Bank of Korea's quarterly consumer survey index, which measures how consumers see economic conditions six months ahead, stood at 65 compared with 64 in the June survey, which was its lowest in 14 quarters.
"We don't expect domestic consumption to recover before the middle of the first half next year, but if oil prices kept flying high, nobody can guarantee an improvement at all," said Yi Hyo-keun, an economist at Daewoo Securities.
The Bank of Korea surprised markets and analysts in early August by trimming its overnight call rate target by a quarter point to 3.5 percent as stubbornly weak consumer spending outweighed concern over inflation.
The index measuring spending plans fell to 98 in the latest survey, conducted in mid-September, from 102 three months before. A reading below 100 means consumers planning to cut spending outnumbered those expecting to spend more.
Finance Minister Lee Hun-jai, in an unusually explicit comment on central bank rates, has said the bank should have delivered a second rate cut in September. Bond investors are betting on an additional cut this year.
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