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A mother of two surnamed Kim said she had a hard time accepting the news report a few weeks ago of Korea’s surprise growth in the first three months of the year.
“I don’t remember the exact figures, but it was something about how the country’s chip exports performed better than expected,” she said.
What she didn’t understand was how the growth was also underpinned by domestic consumption.
“I went ahead and did an online news search, because I did a double take at the TV screen when they said something about domestic consumption picking up. Then I thought to myself, ‘Are you kidding?'”
The news brought her down, since it coincided with her failed attempts at looking for a part-time job as a cashier.
“Everything is so expensive now, especially food, and monthly interest for our mortgage is crippling us further. My husband’s salary hasn’t gone up that much, and I continue to end up with less and less every month. I don’t know what to do.”
An office worker in her 30s surnamed Park feels more or less the same.
“I used to have at least 1 million won ($730) left in my bank account at the end of every month, but the figure has plummeted to less than half. My spending pattern has not changed, but the soaring prices of dining out and fresh fruit are out of my control.”
She was given a raise of 3 percent, but it did little to offset prices going and staying up for years.
“I was happy about the raise, of course, but it has not strengthened my spending power at all.”
These sentiments are common among Koreans grappling with high prices of goods and services as well as borrowing costs.
The Korean economy grew 1.3 percent from three months earlier, propelled by stronger-than-expected semiconductor and IT product exports, coupled with construction investment and private spending.
But household spending power has plunged.
According to Statistics Korea, 26.8 percent of the country’s households were in deficit in the January-to-March period.
Over one-fourth of the total spending surpassing earnings is explained in part by inflation-adjusted household income in the same period dropping 1.6 percent — the steepest decline in seven years.
Household expenditure climbed 3 percent, but it is explained almost exclusively by inflation, as Korea’s headline inflation hovers around 3 percent.
Many households are hamstrung by fixed expenditures that far outstrip disposable income, defined as earned income minus taxes, social insurance premiums, pension premiums and interest payments.
Over 18 percent were deficit-stricken in the fourth-quintile income group, the second-highest earners in a five-tier income group strata. It was up 2.2 percentage points from the year before.
Some 17 percent of the third-quintile income group and 9.4 percent of the fifth-quintile income group — the highest income earners — were reeling from deficit. Among the first-quintile income group, the ratio of deficit-stricken households was 60.3 percent, though this is 2 percentage points lower than the previous year.