Household incomes fall 0.7 percent in second quarter on year

Chung Dong-myung, a Statistics Korea official, discusses second-quarter household income and spending at the government complex in Sejong on Thursday. [YONHAP]

Household income fell 0.7 percent on year in the second quarter to 4.29 million won ($3,600), mainly as a result of the high level of government payments in the same period in 2020.

Income from work rose 6.5 percent, business income rose 3.6 percent and income from assets rose 59.7 percent.

Overall household monthly income fell as transfer income, which includes money from the government, family and friends, tumbled 28.6 percent.

“The second quarter showed signs of recovery, with income from labor and business improving and spending going up,” said Chung Dong-myung, head of Statistics Korea’s social statistics.

Finance Minister Hong Nam-ki stressed that the government spent a total of 14.3 trillion won on support payments to every Korean household in May 2020. The government covered 12 trillion won while the rest was funded by local governments.

“Because of the massive policy support in the second quarter of 2020 due to the early stages of Covid-19, government transfer income surged 113.7 percent whereas the government transfer income in the second quarter of this year shrunk 37.1 percent,” he said.

Due to the smaller amount of government support, monthly income of Koreans with lower incomes fell while those with higher incomes rose.

Incomes for those in the lowest quintile in terms of income fell 6.3 percent, while incomes for those in the highest quintile increased 1.4 percent.

Spending in the second quarter increased 4 percent to 3.3 million won a month on average.

Consumer spending increased 3.8 percent year-on-year, while non-consumer spending, such as taxes, utility bills and rents, went up 4.6 percent.

Spending by higher earners and low earners fell, while those in the middle spent more.

Grocery spending, which is 15 percent of household spending, grew 2 percent.

Consumer prices in each of the last four months have been rising more than 2 percent on year. Grocery prices have been growing in the double digits.

The government has been trying to help by increasing the supply of food.

BY LEE HO-JEONG [lee.hojeong@joongang.co.kr]