August 24, 2017 / 9:05 PM / a year ago

South Korea consumers become less optimistic in Aug, index at three-month low

SEOUL (Reuters) - South Korean consumers became less optimistic about the local economy in August, a central bank survey showed on Friday, as worries about the government’s latest measures to cool housing debt and flaring U.S.-North Korea tensions pressured sentiment.

FILE PHOTO: A man shops at a hat store at the Namdaemun Market in Seoul, South Korea, May 30, 2017. REUTERS/Kim Hong-Ji/File Photo

The Bank of Korea’s composite consumer sentiment index (CCSI) stood at 109.9 for August, down from July when it hit a six-and-a-half-year high of 111.2. The index hit its lowest level since end-May.

The August figure, however, was still well above 100. A reading above 100 level indicates more consumers expect better economic conditions in coming months rather than a deterioration in the economy.

After five months of staying below 100 levels, the index has been hitting triple-digits since April.

By end-August, households’ perception on economic conditions deteriorated to 104 from 109 in July, the lowest since April. Their current financial standing and perception of it also edged lower from a month earlier.

The BOK’s survey comes after the release of government’s toughest housing cooling measures yet and a tax hike plan for the country’s conglomerates, earlier this month, which weighed on domestic market sentiment.

Simmering tensions between North Korea and the United States also took a toll on the local economy, but showed signs of easing as of end-August.

The survey found that the median expectation for the inflation rate over the next 12 months ticked up to 2.6 percent in August, from 2.5 percent in a month earlier.

The central bank’s current 2017 inflation target is 2.0 percent.

Reporting by Dahee Kim; Editing by Gopakumar Warrier

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