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Proportion of Household Spending on Food Rises in 2Q

Posted September. 08, 2010 11:10,   


With prices of agricultural products soaring in Korea, the Engel’s coefficient of the country, or the share of household spending on food, rose to 13.3 percent in the second quarter, the highest in eight years and nine months.

The Bank of Korea and Statistics Korea said Tuesday that of combined household spending of 145.9 trillion won (123.8 billion U.S. dollars) in the second quarter, 19.4 trillion won (16.5 billion dollars) was used for food. The figure is the highest since 13.5 percent in the third quarter of 2001 and ranked 29th among 84 countries.

The Engel’s coefficient of poor countries is generally high. According to statistics compiled by the U.S. Agriculture Department in 2008, the Engel’s coefficient of the U.S. is the world’s lowest at 5.6 percent.

Until the 1980s, the figure for Korea had remained at the 30-percent level but declined to the 12-percent level due to rising incomes. After the onset of the global financial crisis in 2008, however, it began rising from last year to exceed 13 percent.

The growth in the coefficient is attributable to continuous inflation of agricultural products. Despite economic recovery, abnormal weather conditions such as heavy snow and frequent rain have led to higher prices of produce, resulting in more spending on groceries.

Gross national income in this year’s second quarter rose 5.4 percent from the same period last year, but consumer inflation for fresh products was 11.8 percent year-on-year.

The situation is harsher for low-income households. The bottom 20 percent of the income bracket saw their share of spending on vegetables and fruit, two items whose prices have skyrocketed, rise from 3.98 percent in the first quarter to 5.15 percent in the second.

In contrast, the top 20 percent of income earners saw their share marginally rise from 2.31 percent to 2.78 percent over the same period.