Bank deposit rates in South Korea, when adjusted for inflation and taxes, declined to a record low in the third quarter, spurring concern they may further weigh on weak household savings, data compiled by the central bank showed Monday.

The average real deposit rate at local banks, which exclude the inflation rate and taxes levied on interest income, stood at negative 1.63 percent in the third quarter, the lowest since the Bank of Korea began compiling the related data in 1996, according to the BOK.

This means that money being stored in bank accounts is losing value. The real deposit rate, which has been minus since the second quarter of last year, came as the rise in the country’s consumer prices have outpaced deposit rates.

In October, Korea’s consumer prices rose 3.9 percent from a year earlier, slowing from a 4.3 percent on-year gain the previous month. Consumer inflation surpassed the upper limit of the BOK’s 2-4 percent inflation target range for the ninth consecutive month in September. Last month was the first time the number has fallen below 4 percent in 2011.

If this trend continues, it will likely further discourage already waning household deposits, putting a heavier burden on people in deciding where to keep their assets, analysts said.

Despite the outlook that inflation will slow next year, it is unlikely for the deposit rates to go up again since the BOK has maintained its key rate for the last five months, they said.

Last year, households’ savings rates in South Korea averaged 2.8 percent, falling far behind the 6.1 percent for 20 member states of the Organizations for Economic and Cooperation Development. 

(Yonhap News)