Household income grows at record pace amid soaring inflation

The Korea Times

The Korea Times

Finance

Sun, October 1, 2023 | 16:48

Economy

Household income grows at record pace amid soaring inflation

Posted : 2022-08-18 16:49

Updated : 2022-08-18 18:07

By Yi Whan-woo

The nation's average household income rose at a record pace of 12.7 percent in the second quarter, but the real or inflation-adjusted consumption expenditures of households inched up a mere 0.4 percent to mark the slowest rate in 15 months, according to Statistics Korea, Thursday.

The data suggests that the increase in income is not great relative to inflation, which surged to a 24-year high of 6.3 percent in July.

The average monthly income of households stood at 4.83 million won ($3,700) in the April-June period, up 12.7 percent from a year earlier and the fastest year-on-year increase since 2006, when the statistics agency began compiling related data.

The agency attributed this household income increase to the massive government relief aid for pandemic-hit businesses, the recovery of the in-person service sector following the easing of limits on the size of private gatherings and multi-use facility operating hours, as well as the increase in the number of new jobs.

"The relief aid was especially noteworthy," a senior stats official said during a press briefing, referring to the record extra budget of 62 trillion won created in May to support small businesses that experienced losses caused by the pandemic.

During the cited period, the income earned through wages jumped 5.3 percent to an average of 2.89 million won per month.

The average monthly income from business operations increased 14.9 percent to 927,000 won.

Transfer income, which is largely backed by state support, soared 61.5 percent to 679,000 won.

However, the overall household income grew only 6.9 percent year-on-year when adjusted to inflation.

Concerning spending, the average monthly consumption expenditures jumped 6 percent year-on-year in the second quarter, which is the highest for any second quarter since 2010.

But when adjusted to inflation, the increase of the average monthly consumption expenditures turned out to be at a 15-month low of 0.4 percent.

Measured by the percentage of consumption expenditures out of disposable income, households' average propensity to consume dropped 5.2 percentage points year-on-year to 66.4 percent.

The figure was the lowest for any second quarter since 2006, and marked a fall for the fourth consecutive month.

Meanwhile, the income gap between the haves and have-nots widened in the second quarter for the first time in four quarters.

The average monthly income of the bottom 20-percent income bracket rose 16.5 percent year-on-year to 1.13 million won.

In comparison, households in the upper 20-percent income group earned 10.32 million won per month, up 11.7 percent from a year ago.

The country's distribution ratio for disposable income, a key barometer of earnings equality, reached 5.6 in the second quarter, up from 5.59 the previous year. A higher ratio means increased inequality in income distribution.

Statistics showed that the top 20-percent income bracket had 5.6 times more earnings than those in the bottom 20 percent over the cited period.

yistory@koreatimes.co.kr