This file photo taken Sept. 3, 2024, shows customers shopping at a major discount chain store in Seoul. (Image courtesy of Yonhap)
SEOUL, Sept. 18 (Korea Bizwire) — Excess funds held by South Korean households has fallen for eight quarters in a row amid high inflation and interest rates, data showed Wednesday.
The monthly surplus of a local household came to 1.01 million won (US$753.3) per month on average in the second quarter, down 1.7 percent from a year earlier, according to the data by Statistics Korea.
Surplus means households’ real income minus expenditures.
The figure has been on a constant fall since the third quarter of 2022, and it marked the longest ever consecutive decline since 2006 when the agency began compiling the relevant data.
The fall came as real household income had decreased amid high prices.
Real household income logged an on-year fall during four out of the past eight quarters.
The remaining four quarters saw household income inch up less than 1 percent, according to the data.
In 2023, consumer prices, a key gauge of inflation, rose 3.6 percent on-year, following a 5.1 percent increase the previous year. It marked the first time in 19 years that the yearly figure stayed above 3 percent for a second year in a row.
High interest rates have also added burdens.
The Bank of Korea (BOK) markedly raised interest rates from 0.5 percent in mid-2021 to 3.5 percent in January 2023, and has since maintained the level, which is the highest in about 16 years.
“We’ve seen an economic recovery led by exports but the recovery of domestic demand has not relatively picked up pace,” Finance Minister Choi Sang-mok said during a meeting on the economy last week, vowing measures to spur private consumption and investment and to support the vulnerable people.
Inflation eased to 2 percent on-year in August, the slowest increase since March 2021, but BOK Gov. Rhee Chang-yong has said it needs to consider rising home prices and surging household debts as crucial factors for a possible rate cut despite weak domestic demand.
(Yonhap)
