S. Korea consumer confidence falls to 8-month low after ferry disaster

Confidence among South Korean consumers fell to the lowest in eight months as one of the country 's worst maritime disasters dampened willingness to consume, central bank data showed Tuesday.

Consumer sentiment index, which gauges consumer confidence on economic situation, shrank to 105 in May from 108 a month earlier, according to the Bank of Korea. The figure was based on a survey response from 2,200 households nationwide.

The May number was the lowest since 102 was recorded in September last year when concerns spread about the U.S. Federal Reserve's tapering of quantitative easing.

After peaking at 109 in January, the consumer sentiment stayed at 108 for three straight months due to growing expectations for economic recovery.

The figure, however, declined last month as consumers became reluctant to spend money after the ferry Sewol capsized and sank off the country's southwestern coast on April 16. The ferry tragedy left more than 300 people, mostly high school students, dead or missing.

Deep sorrow swept all over the country. Schools canceled class trips and loud cheering at baseball stadiums was avoided. During the golden week from the May 1 Labor Day to the May 6 Buddha's Birthday, many South Korean people and companies delayed or canceled entertainment, promotions and travel.

The government decided to frontload 7.8 trillion won (7.6 billion U.S. dollars) in the second quarter amid signs of the weakening private consumption following the ferry tragedy.

Sub-indexes showed a downbeat picture. Consumer sentiment on current economic conditions plunged 15 points from a month earlier to 76 in May, with that on prospective economic conditions declining 7 points to 94.

Consumer sentiment on current living standards fell from 93 in April to 91 in May, with the figure for prospective living conditions sliding from 101 to 99 in the same period.

South Korean consumers' expectation for inflation fell slightly. Inflation expectation over the next 12 months came in at an annual rate of 2.8 percent in May, down 0.1 percentage point from a month earlier.