The Price of Water Has Risen Much More Than That of Bees

Statistics Korea Survey ... 3rd Quarter Nominal Income Up 3.0%, Real Income Down 2.8%
Income of High-Income Group Increases, Low-Income Group Decreases, Widening Wealth Gap

[Image source=Yonhap News]

[Asia Economy Reporter Kim Jung-wan] Due to high inflation, real household income has turned to a decline for the first time in five quarters. Although income increased, the faster rise in prices meant that the actual earnings decreased.

According to Statistics Korea's "2022 Q3 Household Trends Survey Results" released on the 18th, the average monthly income per household was 4,869,000 KRW, a 3.0% increase compared to the same period last year.

On the other hand, real income decreased by 2.8% compared to the same period last year. This figure reflects the 5.9% surge in prices in Q3 this year compared to the previous year. This means that the money earned was less than the increase in prices, marking the first negative real income since Q2 last year (-3.1%), when social distancing measures due to COVID-19 were in effect, making it the first decline in five quarters.

Consumption expenditure also decreased due to high inflation. Although consumption expenditure in Q3 increased by 6.2% compared to the same period last year, the real consumption growth rate was only 0.3%. This indicates that most of the increase in consumption expenditure was due to rising prices, and actual spending remained flat. In particular, spending decreased in categories such as food and non-alcoholic beverages (-5.4%) and household goods and household services (-9.1%).

The scale of "transfer income," which refers to income through public pensions and basic pensions, sharply decreased. Transfer income and public transfer income decreased by 18.8% and 26.1%, respectively, compared to the same period last year. This is due to the expiration of policy effects such as the COVID-19 mutual consumption support fund provided by the government in Q3 last year.

Low-income households were hit hard by this situation. Unlike the top 80% of households whose nominal income increased due to rising earned income and business income, the nominal income of the bottom 20% of households decreased by 1.0% compared to the same period last year, averaging 1,131,000 KRW per month.

The average monthly income of the top 20% of households (10,413,000 KRW) increased by 3.7% compared to the same period last year, widening the wealth gap. The "equivalized disposable income quintile ratio," which represents the income gap between the top and bottom 20% of households, rose to 5.75 times from 5.34 times in the same period last year, an increase of 0.41 points. A higher ratio indicates a larger wealth gap.