Last Quarter of Last Year Sees 6.4% Monthly Average Household Income Increase... Consumption Spending Rises Amid Soaring Prices (Comprehensive)

Statistics Korea Announces '2021 Q4 Household Trends Survey Results'

[Image source=Yonhap News]

[Asia Economy Sejong=Reporter Kwon Haeyoung] In the fourth quarter of last year, the average monthly household income reached 4,642,000 KRW, marking an increase of over 6% compared to the same period the previous year, the largest growth in a decade. Although the effect of the government-issued national support fund disappeared, the increase in market income earned through household labor drove the income growth. With prices soaring, consumer spending saw the largest increase in 12 years.

According to the "2021 Fourth Quarter Household Trends Survey Results (including households with one or more members and agricultural, forestry, and fishery households)" released by Statistics Korea on the 24th, the average monthly household income in the fourth quarter of last year was 4,642,000 KRW, up 6.4% from the same period the previous year. This is the largest increase since 2011 (7.2%) in 10 years.

Lee Jinseok, head of the Household Income and Expenditure Trends Division at Statistics Korea, explained, "While the government’s national support fund led income growth in the third quarter of last year, this time, earned income from labor and business income drove the increase."

Looking at income by category, earned income accounted for 62.3%, business income 21.9%, transfer income and non-regular income 13.0%, 2.2%, and property income 0.6%, respectively. Earned income was 2,738,000 KRW, up 5.6%; business income was 937,000 KRW, up 8.6%; and transfer income from external sources was 580,000 KRW, up 3.9%.

Examining income levels (income quintiles), lower-income groups experienced larger income growth. The average monthly income for the 1st quintile was 1,058,000 KRW, rising 8.3% from the previous year. The 2nd quintile was 2,531,000 KRW, up 6%; the 3rd quintile was 3,879,000 KRW, up 6.9%; the 4th quintile was 5,612,000 KRW, up 5.3%; and the 5th quintile was 10,130,000 KRW, up 6.9%.

However, real income adjusted for inflation slowed from a 5.3% increase in the third quarter to a 2.8% increase in the fourth quarter.

As prices rose, household expenditures also increased. The average monthly household expenditure in the fourth quarter of last year was 3,406,000 KRW, up 5.5% from the same period the previous year. By expenditure category, clothing and footwear (12.2%), entertainment and culture (11.0%), education (20.6%), and food and accommodation (17.0%) increased, while transportation (-3.2%) decreased.

The average monthly disposable income per household was 3,783,000 KRW in the fourth quarter of last year, up 6.8% from the previous year. However, the average propensity to consume, which indicates the proportion of consumption expenditure in disposable income, was 67.3%, the lowest since statistics for single-person households were first compiled in 2006. The surplus amount, which is disposable income minus consumption expenditure, was 1,236,000 KRW, up 9% during the same period. Looking at disposable income by income quintile, the 1st quintile was 890,000 KRW, up 8.8% year-on-year, and the 5th quintile was 8,108,000 KRW, up 7.1%.

The quintile ratio, which shows the degree of income inequality (based on equivalized disposable income), improved. The quintile ratio indicates how many times the income of the 5th quintile is compared to the 1st quintile; a higher number means greater polarization. The ratio for the fourth quarter this year was 5.71 times, improved from 5.78 times in the same period last year.

Deputy Prime Minister and Minister of Economy and Finance Hong Namgi analyzed the fourth quarter household trend survey results on Facebook, stating, "Market incomes, the main sources of income earned through economic activities such as earned income and business income, increased for three consecutive quarters." He added, "Market income increased across all income quintiles from the 1st to the 5th, with the 1st quintile, representing low-income households, recording the highest growth rate of 13.3%." He further noted, "Public transfer income from government policies also increased. Considering the quarterly changes in income and distribution indicators, the annual income and distribution situation for last year is also expected to have improved."

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