Household income stalls, Koreans save more
Average household earnings have barely changed, inching up 0.8 percent year-on-year in the first quarter to 4.55 million won ($3,857) a month.
As a result, overall expenditure has barely moved, adding 0.5 percent to 3.52 million won, indicating that more families are now saving instead of spending. However, government data shows that spending on cigarettes and alcohol continued to grow.
Average consumption fell 0.3 percent year-on-year in the first quarter to 72.1 percent, according to Statistics Korea on Friday, which means if people earned 1 million won, they only spent about 720,000.
“It appears that people are spending less money due to the weakened economy and consumer sentiment,” said Kim Ie-han, a director at the Ministry of Strategy and Finance.
The same figure hovered roughly around 85 percent during 2000s, but continued to fall starting from 2011, with 72.1 percent being the lowest number for the first quarter since 2003, when the government started to compile the data.
While the growth rate for household income has risen, it remains lower than the inflation rate, which hit 1 percent in the same period.
“Overall earned income and property income fell due to the sluggish labor market and low interest rates in the first quarter,” said Kim.
Low-income earners were affected more by the weak labor market. Income growth rates for level 1, the lowest income earners out of all five categories, fell 2.9 percent year-on-year in the first quarter, while the figure for level 2 was -0.9 percent.
Average household expenditure rose 0.5 percent in the first quarter of this year compared to last year, reaching 3.52 million won. However, the expenditure growth rate fell from 1.7 percent in the fourth quarter of last year. Even though the rate only rose by 0.5 percent, people spent a lot more on cigarettes and alcohol.
“People spent 30.6 percent more on tobacco products and 8.3 percent more on alcohol in the first quarter compared to a year earlier,” said Kim. “The average household spent some 35,000 won for tobacco and alcohol per month in the first quarter.”
People spent more on housing and automobile purchases, but less on fuel, largely thanks to low crude prices.
BY KIM YOUNG-NAM [email@example.com]