Actual Income Growth Rate Stands at Lowest in 2 Years

As the economy stagnates and the consumer price skyrockets, the actual income growth rate of urban households recorded lowest in 2 years.

According to the `2001 Second Quarter`s Urban Household Income Status` released yesterday by the National Statistical Office (NSO), during the second quarter, the actual average monthly income of a nominal urban household stood at 1.9557 million won, a mere 0.8 percent (17,000 won) growth comparing to last year`s second quarter.

Such a growth rate is the lowest one since -0.2 percent of the second quarter of 1999. The consumer price index during the second quarter recorded 126.6, a 26.2 percent increase since 1995.

The slow growth rate explains that with the risen real estate market, the housing cost has increased, and people pay more for public pensions such as social security, and medical insurance.

It is revealed that during the second quarter, monthly housing rental payment also increased by 22.4 percent over the same period of last year, and other costs on water supply (15.5 percent), communication (28.0 percent), public transportation fare (13.1 percent), educational supply (10.6 percent) and beauty supply (12.9 percent) went up as well. As the health insurance cost accelerated, social insurance expense, not the consumption expenditure, increased by 18 percent, and pension expense such as the social security also augmented by 11.6 percent forcing more burden on households. And the tax also went up to 103,000 won, a 4.8 percent increase, during the same period.

Meanwhile, during the second quarter, the average income of a urban household stood at 2.476 million won without considering the consumer price increase, a 6.2 percent (145,000 won) increase comparing to last years same period.

And nominal monthly spending per household was 1.974 million won. Of the monthly spending, actual consumption expenditure excluding tax or pension insurance payment accounted for 1.668 million won, a 8.2 percent increase. It means although actual income remained same, the actual consumption per household increased due to the increase of the consumer price.

The average propensity to consume, which indicates the ratio of consumption expenditure among net disposable income (actual consumable income) stood at 76.9 percent, an 1.0 percent increase compared to last year.

Sun Ju-Dae, director of the NSO’s Social Statistics Department, said, ``During the second quarter, the consumption expenditure growth rate, which has been slow since the end of last year, stood at 8.2 percent, a 2.0 percent point higher than the income growth rate.``

During the same period, the income division rate, which divides the total income of high 20 percent class by the income of low 20 percent class, recorded 5.04, a decrease from 5.76 of the first quarter showing that the income gap between classes has been softened.

The actual income per household is the income earned by the household after considering the 1995`s consumer price index (100).

yhchoi65@donga.com