Household income in Q4 grew on back of gov't subsidies

The average household income rose 3.9 percent in the September-December period to an average of 5.02 million won.

A crowd of people on the streets of Myeong-dong in central Seoul on Feb.18. [NEWS1]

Korea’s household income rose 3.9 percent in the fourth quarter of 2023 with help from government subsidies and property income.

The average household earned 5.02 million won ($3,770) per month in the October-December period, compared to 4.83 million won from a year earlier, according to Statistics Korea data on Thursday.

Income through wages rose at the slowest pace — 1.5 percent — to an average of 3.17 million won per month, down from 7.9 percent growth in the same period a year earlier. Gains from business operations rose 1.6 percent to 1.04 million won after it showed a stagnant growth a year earlier.

Transfer income, which is money from the government in the form of benefits and subsidies, jumped 17.7 percent to 671,000 won, while property income soared 80.3 percent to 52,000 won.

The inflation-adjusted real income advanced 0.5 percent on year in the fourth quarter. Real income earned through wages fell 1.9 percent, the first drop since the third quarter of 2022. Real income earned through business operations also decelerated 1.7 percent for the fifth straight quarter as the cost of labor and raw materials jumped.

It was the first time real income earned through wages and business operations both went down since the first quarter of 2021 following the Covid-19 pandemic outbreak.

“Growth of the overall nominal income in the fourth quarter of last year was led by a large increase in public transfer income,” said Statistics Korea. The increase largely consisted of subsidies for parents and children.

Monthly household spending advanced 5.1 percent in the fourth quarter to 2.83 million won amid inflation that remains above the target rate.

Expenses for housing, water and electricity jumped 9.5 percent on year as monthly rent rose, while those for home supplies and services increased 11.4 percent in the same period. Expenditures on entertainment and culture also jumped 12.3 percent, led by group tours.

Spending on food and accommodation rose 4.3 percent while purchases of groceries and non-alcohol beverages gained 2.4 percent.

Expenditures on fresh produce, including fruit, vegetables and dairy products jumped, but spending on meat and grains decelerated.

Non-consumption expenditures, including interest and taxes, rose 5.6 percent.

The average monthly income of the highest 20 percent of households increased 3.6 percent on year to 10.8 million won. Their average spending also rose 8 percent in the same period to 7.22 million won.

The average monthly income of the lowest 20 percent accelerated 4.5 percent to 1.18 million won in the same period, though their spending inched down 0.5 percent to 1.48 million won.

BY JIN MIN-JI [jin.minji@joongang.co.kr]