South Korea’s consumer skepticism deepened in July as row with Japan added woes on the trade front where exports were slumping by double digits on widespread slowdown from protracted trade tensions between the United States and China.

The composite consumer sentiment index (CCSI) for July retreated 1.6 points to 95.9, according to data released by Bank of Korea on Friday. The index has been heading southbound after reversing direction in May.

CSI measures how consumers view the current and future state of the economy based on a survey on sample 2,500 households across the country. The index is benchmarked to 100 on the average value of 2013-2018, with a reading below 100 indicating more are pessimistic about the economy than being optimistic.

Korean consumers have turned more negative about the country’s economy as headwinds build up for the export-reliant country from Japan’s export curbs against Korea on three high-tech materials going into manufacturing of semiconductors and displays, the country’s mainstay export items. The new trade dispute with Japan has added woes to the country`s economy that has been already grappling with the escalating trade friction between its major trade partners the U.S and China, the bank said.

Out of the six major indicators that make up the consumer index, four retreated while two remained unchanged from the previous month.

The index measuring expectations for future household income fell 1 point to 96, the lowest since April 2009. That for future spending was also down 1 point to 107.

Readings for consumer sentiment about current and future economic conditions sank 1 point each to 67 and 70, respectively.

Consumer view on current household livelihood was unchanged at 91 and their expectations for future household livelihood also stayed the same at 92.

Meanwhile, expectations for future housing prices gained 9 points to 106, the highest since October last year. The reading had remained on the fall since the government introduced stricter lending rules to rein in runaway housing prices since last fall.

The outlook for interest rate plunged 6 points to 94 amid growing expectation for rate cuts in both Korea and the U.S.

Expectations for job opportunities worsened with the related index falling 2 points to 77.

Consumer view on inflation over the past year stayed the same as last month at 2.2 percent. Their inflation expectation for the coming year also was unchanged at 2.1 percent.

By Kim Yeon-joo and Cho Jeehyun

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