The confidence of South Korean consumers rebounded to pre-martial law levels amid hopes for a new government to be elected in June.

The Composite Consumer Sentiment Index in May rose to 101.8 from 93.8 in April, according to data from the Bank of Korea on Tuesday.

It was the highest since October 2024, when it hit the same index, Business Korea reported on the same day.

"The overall sentiment gain is largely due to expectations of stabilized prices and increased support from the new government to be named after the 3 June election," Min Joo Kang, ING's senior economist for South Korea and Japan, said. "Lower interest rates are also seen easing the burden of servicing the debt for consumers."

Consumer sentiment for current living standards, future household incomes, and current domestic economic conditions all rose, the BOK said.

The central bank also updated its inflation rate for the year to 2.6% from 2.8%, prompting confidence that the 2% target is likely to be reached more easily.

In the wake of the current outlook, the BOK is expected to cut rates by 25 basis points on Thursday to continue to support growth, Kang said.