Household Income Declines for First Time in 4 Years... Q2 Consumption Rises Due to COVID-19

Average Monthly Household Expenditure in Q2 Increases by 3.8% Compared to One Year Ago

[Image source=Yonhap News]

[Asia Economy Reporter Jang Sehee] Household income in the second quarter decreased for the first time in four years. In May last year, the government provided disaster relief funds to all citizens, temporarily increasing household income, but this effect disappeared this year, which is cited as one of the causes.

According to the "Second Quarter Household Trend Survey Results" announced by Statistics Korea on the 19th, the average monthly income of households nationwide was 4,287,000 won, down 0.7% compared to a year ago.

When adjusted for inflation, the decline in real income expands to 3.0%. This marks a return to a downward trend for the first time in 16 quarters since the second quarter of 2017 (-0.5%).

Looking at the details, transfer income fell significantly to 617,000 won, a decrease of 28.6%, greatly impacting the overall decline in household income.

Public transfer income, including government support payments, dropped 37.1% to 421,000 won. Private transfer income, such as allowances from relatives, increased slightly by 1.1% to 196,000 won.

Jung Dongmyung, Director of the Social Statistics Bureau at Statistics Korea, analyzed, "Social benefits, which had sharply increased last May due to the nationwide disaster relief payments, decreased this quarter," adding, "This base effect caused the total household income to decline."

Although income decreased, expenditures increased. The average monthly consumption expenditure per household in the second quarter was 2,475,000 won, up 3.8% from a year earlier. This is the highest growth rate since the first quarter of 2012 (4.5%).

Expenditure increases were generally higher among low-income groups. Household expenditures for the bottom 20% rose 6.0% year-on-year, while the 21-40% group increased by 5.2%, and the 41-60% group by 1.4%. The 61-80% group actually decreased by 1.9%. However, the top 20% increased their spending by as much as 8.2%.

By category, spending on housing, water, and utilities, including housing rent, maintenance, and fuel costs, rose by 7.8%.

Costs related to housing maintenance and repairs surged by 69.7%, which is analyzed to be influenced by increased time spent at home due to COVID-19. Actual housing costs such as monthly rent also showed an upward trend, increasing by 4.5%.

This content was produced with the assistance of AI translation services.