Real Household Income Shrinks as Inflation Soars

  • By Kim Sung-mo

    August 25, 2023 11:51

    Real household income fell by a record 3.9 percent on-year in the second quarter of this year as COVID subsidies disappeared and consumer prices soared.
    Household disposable income shrank to the lowest level ever during the period between April and June.
    According to Statistics Korea on Thursday, the average monthly income per household stood at W4.79 million, down 0.8 percent from a year ago, both the biggest drop ever for the second quarter since 2016 and for all quarters since the third quarter of 2009, just after the global financial crisis (US$1=W1,323).
    Counting inflation, real income declined even more, but the end of up to W10 million in government subsidies for small businesses hit by the coronavirus pandemic had a big impact.
    A woman shops for groceries in a superstore in Seoul on Thursday. /Yonhap
    Average household spending increased 4.1 percent from a year ago to W3.65 million. Out of that, spending on everyday goods and services rose 2.7 percent to W2.69 million, though actual expenditures fell 0.5 percent if rising prices are considered as Koreans tightened their belts where they could.
    Average non-consumption spending like interest and insurance payments soared 8.3 percent on-year to W962,000. That can be mostly attributed to 42.4 percent rise in interest payments due to soaring interest rates.
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