SEOUL, Jan 8 (Reuters) - Sales at South Korea’s top department store chains grew at a much slower annual rate in December than the previous month, preliminary government data showed on Wednesday, underscoring subdued consumer spending despite improving overall growth.
Sales at the department store chains grew by 0.3 percent from a year earlier last month, down from a 5.9 percent rise in November, Seoul’s finance ministry said in a monthly report. December’s number was the weakest monthly showing since a 1.7 percent drop in October.
At the country’s top discount store chains, sales shrank by 6.0 percent in December, reversing a 0.8 percent rise in the previous month and marking the fifth decline in six months.
The data underscores how domestic demand has yet to pick up in earnest in South Korea despite gradually improving exports, highlighting the challenge for local policymakers to ensure the nascent recovery takes hold this year.
The Bank of Korea’s composite consumer sentiment index stood at 107 for December for the second consecutive month. That level is the highest since a reading of 109 in February 2011, and suggests that consumers are optimistic about the future.
But the rosier outlook has yet to translate to a pickup in spending. South Korean households remain heavily indebted and under pressure from the weak property market, pushing them to save cash despite continued income growth and subdued price pressures.
“While the signs of recovery for our economy are getting stronger, recovery for the private sector including investment does not yet appear to be firm,” the finance ministry said in a statement.
President Park Geun-hye’s administration aims to reinvigorate private consumption through various policy measures this year, such as further regulatory reform to boost service-sector activity and creating more jobs to boost household income.
The ministry said sales of locally produced automobiles fell 11.8 percent in December in annual terms, the sharpest decline since September as potential buyers held off on making purchases until a consumption tax reduction takes effect in January.
Gasoline sales by volume rose by 8.0 percent from a year earlier in December, however, picking up from a 0.6 percent rise in November.
In the monthly report, the finance ministry reiterated that the U.S. Federal Reserve’s tapering of its monetary stimulus, the country’s debt ceiling uncertainties and the ongoing depreciation of the Japanese yen pose risks to the domestic economy. (Reporting by Se Young Lee; Editing by Kenneth Maxwell)