Consumer Confidence Index Drops for Third Months In a Row

The Consumer Expectation Index (CEI), which indicates consumers’ expectations of the economy six months later, has been on a downward path for three consecutive months.

The middle class, with a monthly income level of two to three million won, is particularly negative about economic prospects, leading to concerns about economic recovery.

The CEI, which demonstrates consumers’ expectations of the economy, their economic condition, and consumer spending fell by 3.8 percent from 99.2 percent the previous month, according to “The Consumer Sentiment Indicators in June 2005” released by the National Statistical Office (NSO) on July 6.

The index has fallen for three months in a row and was below 100 for the last two months. The CEI falls below 100 when there are more consumers with negative economic expectations than with positive expectations.

The middle class predicted the economy to be especially gloomy.

The CEI of those with a monthly income in the two million won range rose to 104.0 in March after it surpassed 100 in February (102.8), which was regarded as a sign of economic recovery. The index, however, has been on a downward path since April and fell to 97.7 last month.

The CEI of consumers with a monthly income in the three million won range dropped from 102.0 to 98.0.

Chang-Won Kim changkim@donga.com