Income Drops as Interest Rates Surge

Soaring inflation caused real household income to decline in the third quarter of this year while rising interest rates led to a heavier burden.

Households' interest payments jumped a whopping 19.9 percent to W104,000 on average, the biggest increase since the fourth quarter of 2018 (US$1=W1,339).

According to Statistics Korea on Thursday, the average monthly household income stood at W4.87 million from July to September, up three percent from a year ago. But real income reflecting consumer prices declined 2.8 percent, the biggest drop in 13 years as inflation reached its highest point since 1998.

Average monthly household expenditures rose 6.2 percent on-year to W2.7 million, but real household spending edged up only 0.3 percent. Statistics Korea said inflation only made it look as though spending increased because money was worth less.

Spending on food and non-alcoholic beverages actually fell 12.4 percent. But 25.3 percent of households were in the red as expenditures surpassed disposable income, which subtracts taxes and interest costs.

The wage gap between the top and bottom 20 percent of the income bracket stood at 5.75 times, up from 5.34 times a year ago.