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Consumption slows down amid high rates, inflation

Dec. 3, 2023 - 22:06 By Yonhap
A customer sees fruits displayed at a supermarket in Seoul on Sunday. (Yonhap)

South Korea's domestic consumption is expected to slow down further after local service sector output posted the lowest-level growth in 32 months in November amid high rates and high inflation, government data showed Sunday.

Output in the service sector grew 0.8 percent last month compared to the same month of last year, marking the lowest on-year monthly growth since reporting a 0.8 percent decline in February 2021, according to data from Statistics Korea.

Services output began to increase steadily from the second half of 2021 to report an average of 8.5 percent on-year growth in the third quarter of 2022, the data said.

But the service-sector activity has been on a sharp decline this year posting 2.3 percent growth in the second quarter and 1.9 percent growth in the third quarter.

In particular, output in accommodations, restaurants, arts, sports and leisure industries suffered the biggest decline amid an economic slowdown.

High rates and high inflation are widely expected to continue at least until the first half of next year, given comments from Bank of Korea (BOK) Gov. Rhee Chang-yong in October.

Asked how long the BOK will maintain its tightening policy, Rhee said it will take more than six months until the central bank is confident that inflation reaches the bank's target of 2 percent. (Yonhap)