"We Should Be Thrifty When the Economy is Sluggish"

Housewife Song Young-joo feels distressed every time she goes grocery shopping. The reason is that shopping itself is a difficult task because the prices have skyrocketed in the last six months.

“Only six months ago, 50,000 won was enough to cover meal expenses for the weekend, but now even 100,000 won is not enough to provide good meals” said Song.

Taking into consideration her son’s future kindergarten fees or private tutoring expenses, it does not seem like her husband’s monthly salary will be enough. Government officials claim that the economy is on its way to recovery, but their assertions seem out-of-touch with reality, and money cannot be spent casually.

Consumer sentiment, which had shown signs of unthawing, is freezing again. Moreover, as the economic recession continues, consumers are displaying an increasing tendency to buy low-price products.

Consumer expectation index turns to a decline after five months—

According to the “Consumer Outlook Survey Results for February 2004” released on March 11 by the National Statistical Office, the consumer expectation index, a key indicator of consumer sentiment for the general economy, household finances, consumption, and spending in the upcoming six months, fell 1.7 points from 98.0 in January to 96.3. It is the first time in five months that the consumer expectation index has decreased compared to the previous month.

If the consumer expectation index falls below 100, it means that there are more households that think the economy and household finances will be in a worse state in six months than those that don’t. If the number is above 100, then vice versa.

The expectation index for the general economy fell below 100 on October 2002, recording 97.1, and has stayed in the 90-range for the last 17 months.

The index stood at 95.6, decreasing from 99.6 in January, and indicates that more consumers felt the economy was going to get worse.

The index for household finances slid from the previous month’s 101.8 to 98.5.

When it comes to income, the index slightly rose to 104.9 from the previous 103.7 in households with three million~3.99 million won in income, but saw a decline for most of the other households.

In terms of age, the index for all ages fell with the index for people in their 30s falling to the 90s after standing at 100.9 in January.

The consumer evaluation index, an indicator to gauge the consumers’ attitude in terms of the current economic state and household finances compared to six months ago, decreased 1.7 points from 72.6 in January to 71.9.

27.7 percent of households answered that they had more debts than half a year ago, increasing 2.4 percent from January’s 25.3 percent.

Searching for low-price products—

According to the “Sales Report of Major Distributors for February” released by the Ministry of Commerce, Industry, and Energy on March 11, last month’s sales at department stores increased 6.3 percent compared to the same month last year, while sales for wholesale discount stores rose 10.8 percent. It is the first time in two months that department store sales have been able to record an increase, the first time in three for wholesale stores.

However, the increase can be contributed to the fact that there were two more days of business in February this year, and there are higher demands during the school graduation and entrance season. The actual amount of money spent by a customer on one shopping occasion dropped 6.4 percent in department stores and 1.7 percent in wholesale stores.

An average person’s expenditures at a department store was 52,923 won, a 20 percent drop in just five months from 64, 979 won in October last year, which indicates that the tendency to buy cheaper products is increasing.

Jin-Hup Song Jin-Suk Huh jinhup@donga.com koh@donga.com