South Korean consumer confidence fell to its lowest level in 10 months in January as persistent public debt concerns in Europe and the standoff over Iran’s nuclear ambitions fueled economic uncertainties, the central bank said Friday.

The consumer sentiment index, which gauges consumers’ overall economic outlook, living conditions and future spending, fell 1 point from the previous month to 98 for January, according to a survey by the Bank of Korea.

The January figure marked the lowest level since the index came in at 98 in March 2011. In December, the CSI fell four points to 99.

A reading below the benchmark 100 means pessimists outnumber optimists. The survey, based on a poll of 2,200 households in 56 cities nationwide, was conducted Jan. 12-19.

“While the public debt crisis in Europe is not making headway, Iran’s nuclear ambitions have emerged as a source of concern this month,” said Jang Wan-sub, an economist at the BOK.

“With increased global economic uncertainties and a possible slowdown in the domestic economy, consumer sentiment failed to make a comeback.”

The U.S.-led move to impose sweeping sanctions against Iran aimed at deterring the country’s nuclear program is seen as a major downside risk to the global economy this year, as it threatens to raise crude oil prices.

The sentiment index data came as the central bank reported a lower-than-expected growth of the South Korean economy for the fourth quarter.

The BOK said Korea’s domestic gross product, the broadest measure of economic performance, expanded 0.4 percent in the final quarter of 2011, the slowest pace in two years.

Korean economy expanded 3.6 percent overall in 2011 from the previous year, it added.

Last month, the central bank cut its 2012 growth outlook for Asia’s fourth-largest economy to 3.7 percent, down from an earlier estimate of 4.6 percent.

The BOK, meanwhile, held the key interest rates steady at 3.25 percent for the seventh straight month in January, citing heightening risks from Europe’s debt crisis and slowdown in the domestic economy.

Despite government’s pledge to curb inflationary pressure, Korean consumers forecasted this month that the country’s consumer prices may move up an average of 4.1 percent this year, up 0.1 percentage point from the December’s reading, the central bank said.

The central bank aims to keep annual consumer inflation at 3.3 percent this year, after consumer prices rose 4 percent in 2011.

The sub-index measuring consumers’ economic growth outlook fell to 76 in January, down from 78 tallied in December, indicating that the growth projection is shrinking amid growing risks from Europe. 

(Yonhap News)