Consumer confidence dropped sharply in July, and that suggests a further slowdown in consumer spending. But the much bigger issue in the July consumer confidence survey was the further sharp rise in inflation expectations, up almost 1ppt just since June (and now more than 2ppts since the beginning of the year) to 4.7%.
Some of this will reflect where inflation currently is, so some moderation can be expected if and when headline CPI starts to lessen. But still, this is a very sharp rise, and further confirms that the BOK's recent hawkishness will persist even as growth starts to slow in the next few months.
Of course, the drop in headline consumer confidence was likely due in part to the further rise in inflation expectations, although if that is true, it is surprising that perceptions of living standards in the survey remained quite firm. There are other factors affecting consumer confidence, most notably a renewed rise in Covid-19 cases. But spending intentions also remained at a high level in July, and despite the sharpness of the decline in July, consumer confidence is still suggesting that private consumption goes sideways in YoY terms.