South Korea’s Consumer Confidence index fell to -24.60 in November 2025, according to the latest release from the Sigmanomics database. This figure missed the consensus estimate of -23.00 and declined from October’s -22.80, marking a notable deterioration in consumer sentiment over the past month. The index remains well below the 12-month average of -22.70, underscoring persistent consumer caution.

Drivers this month

• Rising inflationary pressures, particularly in energy and food prices, eroded purchasing power.
• Heightened geopolitical risks in the region, including tensions on the Korean Peninsula, increased uncertainty.
• Monetary tightening by the Bank of Korea, with recent rate hikes, dampened borrowing appetite.

Policy pulse

The current reading sits below the neutral confidence threshold and signals consumer wariness amid tightening financial conditions. The Bank of Korea’s inflation target of 2% remains challenged by sticky core inflation, prompting cautious monetary policy stances.

Market lens

Immediate reaction: The South Korean won (KRWEUR) depreciated modestly by 0.30% in the first hour post-release, reflecting investor concerns over weaker domestic demand. The 2-year government bond yield rose 5 basis points, signaling expectations of continued monetary tightening.

Consumer Confidence is a leading indicator of household spending, which accounts for roughly 55% of South Korea’s GDP. The decline to -24.60 aligns with recent softening in retail sales growth, which slowed to 1.20% YoY in October from 2.00% in September. Inflation remains elevated at 4.10% YoY, well above the central bank’s target, pressuring real incomes.

Monetary Policy & Financial Conditions

The Bank of Korea has raised its policy rate by 75 basis points since mid-2025, reaching 4.25%. This tightening aims to curb inflation but increases borrowing costs for consumers and businesses. Credit growth has slowed to 3.50% YoY, down from 5.00% earlier in the year, reflecting tighter financial conditions.

Fiscal Policy & Government Budget

Fiscal policy remains moderately restrictive, with the government targeting a deficit of 3.20% of GDP in 2025. Recent budget adjustments prioritize social safety nets and energy subsidies to shield vulnerable households, but overall fiscal space is limited amid rising debt levels.

External Shocks & Geopolitical Risks

Trade disruptions from ongoing US-China tensions and supply chain bottlenecks continue to weigh on export-driven growth. Additionally, geopolitical uncertainty related to North Korea’s missile tests has heightened risk aversion among consumers and investors alike.

Historically, the index has oscillated between -20 and -25 over the past year, reflecting a fragile recovery environment. The current reading suggests consumers are increasingly concerned about economic prospects, particularly inflation and geopolitical risks.

Market lens

Immediate reaction: The KRWEUR currency pair weakened by 0.30%, while the 2-year government bond yield rose 5 basis points, indicating market anticipation of sustained monetary tightening. Equity indices showed muted response, reflecting cautious investor sentiment.

Looking ahead, consumer confidence in South Korea faces several potential trajectories depending on policy actions and external developments.

Bullish scenario (30% probability)

• Inflation moderates toward the 2% target by mid-2026, restoring real incomes.
• Geopolitical tensions ease, improving consumer and business sentiment.
• Monetary policy shifts to a neutral stance, supporting credit growth and spending.

Base scenario (50% probability)

• Inflation remains elevated but stable around 3-4%, limiting real income gains.
• Geopolitical risks persist but do not escalate significantly.
• Monetary tightening continues cautiously, balancing inflation control and growth.

Bearish scenario (20% probability)

• Inflation spikes above 5%, eroding purchasing power sharply.
• Geopolitical conflicts intensify, triggering risk aversion and capital outflows.
• Monetary policy tightens aggressively, further dampening consumption.

Overall, the outlook is tilted toward cautious optimism but remains vulnerable to shocks. Policymakers face a delicate balancing act between inflation control and supporting growth.

South Korea’s November 2025 Consumer Confidence reading of -24.60 signals a renewed dip in household optimism amid persistent inflation and geopolitical uncertainty. The data from the Sigmanomics database highlights the challenges facing policymakers as they navigate tightening monetary conditions and external risks. While the base case suggests continued subdued sentiment, the potential for inflation moderation and geopolitical easing offers upside. Financial markets have priced in cautious expectations, with the KRW and bond yields reflecting the complex macro backdrop.

Investors and policymakers should monitor inflation trends, geopolitical developments, and fiscal responses closely. Consumer confidence remains a vital barometer for domestic demand and overall economic health in South Korea’s export-driven economy.

Red links to tradable symbols relevant to this analysis:

• KOSPI – South Korea’s benchmark equity index, sensitive to domestic consumer sentiment and export outlook.
• KRWEUR – The South Korean won versus euro currency pair, reflecting capital flows and risk sentiment.
• USDKRW – USD to KRW exchange rate, a key indicator of external pressure on the Korean economy.
• BTCUSD – Bitcoin’s price, often a proxy for risk appetite and alternative asset flows.
• SAMSUNG – A major South Korean conglomerate, whose performance correlates with consumer and export trends.