Sales at department stores, large supermarkets and car dealers all plunged in July compared to the same period a year ago, according to the latest statistics. The government tracks sales there as an index to quickly access spending patterns.
Sales in large supermarkets fell 8.3 percent year-on-year surpassing the 7.2-percent drop seen in June, the Ministry of Strategy and Finance said last week. Sales of major department stores also dropped 0.9 percent, a slight improvement compared to the 2 percent decline seen in June.
But the July figures were disappointing nonetheless considering the lengthy sales promotions at major department stores last month. Car sales dropped 4.6 percent in July, a sharper decline from the 3.7-percent drop in June.
The government, which had been saying there are signs of a slow recovery, has begun to fret after the latest figures. "Despite a drop in consumer prices and other signs of improving conditions, it is taking longer for consumer sentiment to improve due to the ongoing economic uncertainties both here and abroad," the ministry said.
"As fears of an economic slump spread, consumers are keeping their wallets shut," said Yoon Chang-hyun at the Korea Institute of Finance. "We need to come up with measures quickly to boost consumption."
Prof. Ha Joon-kyung at Hanyang University attributed slow consumption partly to the weakened spending power of the middle and low-income bracket due to heavier household debt, and urged the government to come up with ways to weaken their debt burden.