The Lowest Consumption Increase Rate for the Third Quarter after 3 Years and 6 Months

A consumption psychology of urban workers` family has been frozen. An income gap between the high level and low level has been serious continuously.

According to `Trend of Households` total income and expenditure for the urban workers` family for the third quarter (Jul. ~ Sept.) published by Korea National Statistical Office (NSO) on November 25, the increase rate of consumption expenditure was 3.0% over the same period of the previous year and reached to the lowest increase rate after 3 years and 6 months since the first quarter of 1999 (Jan. ∼Mar.). For the first and second quarter, the increase rate of consumption expenditure was in a level of 7%, compared with the same period of the last year.

Dividing the consumption expenditure by available income, the average consumption propensity of the third quarter was 72.1 as the lowest point after the fourth quarter of 1998 (Oct. ~ Dec.).

The monthly average income per household for the third quarter was 2,863,000 won, increased by 4.7% over the same period of the last year. Considering the increase of customer price, the monthly average real income was 2,666,000 won increased by 2.1%.

However, the monthly average expenditure per Household was 2,153,000 won increased by 3.6% and the real consumption expenditure was 1,709,000 won increased by 0.4%.

As the consumption has increased lower than the income, the black of the monthly average households` total income and expenditure was 710,000 won. It firstly exceeded 700,000 won for the first time after 5 years since the third quarter of 1997.

In terms of the consumption expenditure, the expenses of transportation and communication decreased by 1.2% owing to the decrease in the car purchase. Also, the increase rate of foodstuffs expense was dropped to 2.1% from 6.8% of the same year of the last year. The increase rate of eating-out expense decreased by 4.2% from 11.3% and the increase rate of the education expense decreased to 2.2% from 16.3%.

The NSO estimated that the consumption index of the fourth quarter based on the household loan restriction and credit card measures is likely to be worse.

Besides, dividing the monthly average income(5,585,600 won) of 5 level involved in the upper 20% by the monthly average income (1,091,700 won) of 1 level involved in the lower 20% was calculated at 5.12. It was 0.1 point higher than 5.02 point of the second quarter. IT showed that there were serious income gap between the upper and lower levels.

In terms of 5 levels by year, there were △ 4.49 for the third quarter of 1997, △ 5.47 for the third quarter of 1998, △ 5.29 for the third quarter of 1999, △ 5.20 for the third quarter of 2000 and △ 5.50 for the third quarter of 2001.

Kwang-Am Cheon iam@donga.com