South Korea’s household income and spending remained flat in the second quarter this year amid a prolonged economic slowdown.

According to data released by Statistics Korea on Friday, the average monthly household income on a nominal basis in the April to June period edged up 0.8 percent on year. The inflation-adjusted or real household income contracted 0.2 percent over the cited period. Real income has been shrinking, down 0.2 percent in the fourth quarter after staying flat in the third and gaining 2.3 percent in the second quarter last year.

Income from earnings rose 1.9 percent and transfer income, government payments to individuals in the form of welfare or social benefits, expanded 3.8 percent, in the second quarter this year.

Household disposable income, the amount of money that a household can actually spend after paying taxes or other welfare contributions, averaged 3,519,000 won in the second quarter, up 1.0 percent on year.

The average household spending remained unchanged at 2,494,000 won in the second quarter compared to the same period last year. The average consumption propensity, the ratio of consumption to disposable income fell 0.7 percentage point to 70.9 percent during the same period, the lowest since the data has been kept record in the first quarter of 2003. The previous lowest figure was 71.5 percent in the fourth quarter 2014 and the third quarter 2015.

Households chose to save whatever left. Of disposable income, the amount set aside averaged 1,025,000 won, up 3.6 percent from a year-ago period.

Amid foggy economic prospects, Koreans further tightened their belt and kept spending to the necessities even cutting back on children’s education and foodstuff. Spending on food and non-alcoholic drinks averaged 329,000 won a month in the second quarter, down 4.2 percent on year. Expenditures on home products and services fell 5.1 percent to 104,000 won. Spending on education was down 0.7 percent to 230,000 won over the same period.

In a typical sign of recession, spending on tobacco and alcohol spiked 7.1 percent on year to 35,000 won. Cigarette consumption jumped 10.9 percent after a contraction early last year due to hike in prices.

Protracted economic slowdown widened income inequalities. The monthly income of the bottom 20 percent bracket fell 6.0 percent on year to 1,396,000 won in the three months ended June while that of the top 20 percent income bracket rose 1.7 percent to 8,213,000 won.

By Lee Seung-yoon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]