South Korea's private consumption falls amid political

South Korea's private consumption fell for two straight months amid the lasting political unrest caused by the impeachment of President Park Geun-hye, a government report showed on Wednesday.

Retail sales, which reflect private expenditure, shed 1.2 percent in December from a month earlier, Statistics Korea data showed, in November, the sales in retail stores edged down 0.1 percent.

Falling consumption came amid uncertainties around the political sphere following the impeachment of President Park, which was passed in the parliament on Dec. 9 last year.

Hundreds of thousands of South Koreans have taken to the streets every Saturday night to demand an immediate resignation of the president since the influence-peddling scandal involving Park's longtime confidante emerged in late October.

Bank of Korea (BOK), the country's central bank, said in its biannual monetary policy report Tuesday that political uncertainty negatively affects the services industry, facility investment and private consumption, citing past cases of political uncertainties having a negative impact on the economy.

Higher interest rates also led consumers to tighten their purse strings as it increased the debt-serving burden for households, which are struggling with massive debts, especially mortgage loans.

Lending rates here recently turned upward as the U.S. Federal Reserve indicated three rate increases in 2017 after raising its policy rate by a quarter percentage point in December.

The BOK slashed its benchmark rate from 3.25 percent in July 2014 to an all-time low of 1.25 percent in June last year. It encouraged households to purchase home with borrowed money amid eased regulations on mortgage financing.

source: Xinhua