Post-COVID Consumption Inequality Up 0.07P...Low-Income Groups Spent Less on Groceries and Healthcare

Presentation on Estimation and Key Characteristics Analysis of Consumption Inequality in Our Country

[Asia Economy Reporter Jang Sehee] An analysis has emerged that consumption inequality (quintile ratio) has further widened as income and consumption conditions changed during the COVID-19 crisis. In particular, due to restrictions on mobility caused by social distancing, consumption inequality deepened mainly in essential goods (non-outdoor consumption).

According to the monthly statistical report "Estimation of Consumption Inequality and Major Characteristics in Korea" released on the 29th by Kim Chanwoo, Manager of the Price Research Team at the Bank of Korea, and Kim Cheolju, Researcher of the Forecast Model Team, consumption inequality last year was 3.74, up 0.07 points from 3.67 in 2019. The widening gap is attributed to a decrease in income among low-income groups. The proportion of pre-transfer income in 2020 increased compared to 2019, especially among those with lower income.

Manager Kim stated, "Consumption inequality expanded mainly in essential goods due to mobility restrictions," adding, "The gap was particularly significant in areas such as food, healthcare, and housing."

In particular, consumption inequality intensified in essential goods, including food, healthcare, and information and communication. As outdoor consumption was replaced by non-outdoor consumption due to mobility restrictions, the contribution rate of essential goods to consumption inequality increased by 3.8 percentage points last year. In the case of discretionary goods, it decreased by 5.2 percentage points, mainly in entertainment and culture.

Consumption inequality in Korea from 1990 to 2016, adjusted for measurement errors, was found to be significantly higher than existing indicators that directly used survey data. According to the measurement error-adjusted indicator, consumption inequality rose by about 0.66 points, whereas the existing indicator showed an increase of only about 0.13 points. If consumption by high-income groups is underestimated, consumption inequality is also likely to be underestimated.

Even if COVID-19 eases, consumption inequality is expected to further widen. While consumption by high-income groups is gradually increasing, low-income groups are likely to continue experiencing poor income conditions.

Furthermore, the research team analyzed that the consumption gap between the middle class and low-income groups may also widen. As government income support policies are gradually reduced due to fiscal burden in the future, income disparity could expand.

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