Real household income fell by the largest margin in seven years in the first quarter of this year as prices rose even more despite a rise in nominal income. One in four households was in a “deficit” state, where consumption expenditure was greater than disposable income.
According to the results of the Household Trend Survey in the 1st Quarter of 2024 released by the National Statistical Office on the 23rd, the average monthly income per household (including households with more than one person and farm households) in the 1st quarter of this year was KRW 5122,000, up 1.4% from a year ago.
Household income increased for three consecutive quarters, but the increase slowed significantly from the previous quarter (3.9%).
This was largely due to a 1.1% decrease in earned income (3.291 million won), which accounts for the largest portion. Household earned income turned negative for the first time in three years since the first quarter of 2021 (-1.3%) due to a decrease in bonuses due to poor corporate performance last year.
Despite the increase in nominal income, real household income, which reflects inflation, fell 1.6% from a year ago. It turned negative for the first time in three years since 2021 (-1.0%) as of the first quarter, the biggest decline in seven years since the first quarter of 2017 (-2.5%).
Lee Jin-seok, head of the Household Trend Account Division at Statistics Korea, said, “The real income of households has become negative because income has not increased as much as prices.”
The average monthly consumption expenditure of households was 2.908 million won, up 3.0 percent from a year ago. Non-consumption expenditure rose 1.2% to 1,076,000 won due to increased interest expenses. The average monthly disposable income excluding non-consumption expenditure from income increased 1.4 percent to 4,046,000 won.
The surplus after subtracting consumer spending from disposable income fell 2.6 percent to 1.138 million won, turning negative again for the first time in three quarters.
The surplus rate, which refers to the surplus to disposable income, was 28.1%. The surplus rate has been negative for seven consecutive quarters since the third quarter of 2022.
The proportion of deficit households with higher consumption expenditures than disposable income was 26.8%, up 0.1 percentage point (p) from a year ago.
The average monthly income of households in the bottom 20% of income and households in the top 20% of income was 1,157,000 won and 11,258,000 won, respectively.