The Proportion of 'Food Expenses' for Low-Income Households Exceeds Three Times That of High-Income Households

Bottom 20% Income Group Spends 42% of Disposable Income on Food... Over 3 Times More Than Top 20%

The appearance of a large supermarket in Seoul on the 25th of last month.

[Asia Economy Reporter Kim Jung-wan] Households in the bottom 20% income bracket spent more than 40% of their disposable income on food and dining out in the first quarter of this year. Analysts say that as living costs have risen sharply, the spending burden on low-income groups has increased further.

According to the Ministry of Economy and Finance (MOEF) and the Statistics Korea National Statistical Portal (KOSIS) on the 7th, the nominal expenditure on food and dining out (357,754 KRW) accounted for 42.2% of the average monthly disposable income (847,039 KRW) of the bottom 20% income group (first quintile) in the first quarter of this year. Of this, spending on food and non-alcoholic beverages consumed at home was 251,783 KRW, and dining out expenses were 105,971 KRW. (※ 'Disposable income' refers to the income available for consumption and savings after taxes and other deductions.)

Nearly half of the disposable income, which is income after taxes and pensions, of low-income households was spent on food expenses. This figure is more than three times higher than the average food expenditure ratio of the top 20% income group (fifth quintile), which is 13.2%, and significantly higher than the overall household average of 18.3%.

The MOEF analyzed, "As household living expenses increase, the sharp rise in living costs such as food and dining out is restricting the real purchasing power of the working class and low-income groups."

In fact, the consumer price index for food and non-alcoholic beverages in the first quarter of this year was 109.32 (2020=100), up 4.1% compared to the same period last year. The price of food and accommodation services also rose by 6.0%, with food services (6.1%) increasing more sharply than accommodation services (3.1%).

Moreover, this upward trend in consumer prices has been intensifying in the second quarter.

The consumer price index in May this year rose 5.4% compared to the same month last year, marking the highest increase in 13 years and 9 months since August 2008 (5.6%).

The consumer price inflation rate entered the 4% range from March this year and surged to the 5% range in May for the first time since September 2008.

In particular, dining out prices rose 7.4%, the largest increase in 24 years and 2 months since March 1998 (7.6%).

Processed foods, a staple on the dining table, also rose 7.6%, and livestock products increased by 12.1%, centered on pork (20.7%), imported beef (27.9%), and chicken (16.1%).

If the price increase continues, the burden on low-income groups and the working class will inevitably grow. Especially if rising prices reduce household consumption and weaken growth, a vicious cycle may occur where income decreases and consumption contracts again.

Joo Won, head of research at Hyundai Research Institute, pointed out, "Prices have risen so much that people are effectively reducing their spending," adding, "Inflation is having a negative impact on the economy, mainly on domestic demand."

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