South Korea income gap narrows as fuel payments lift households, spending slows

South Korea’s equalized disposable-income quintile share ratio fell to 4.97 in the second quarter from 5.45 a year earlier, the narrowest gap in the updated account, as high-oil-price support payments boosted lower-income households. Average monthly household income rose 4.5% year over year to ₩5.295 million, while real income increased 1.5%. Transfer income rose sharply, with reports citing increases of 20.4% and 16.9%, and public transfer income rose 27.6%. Earned income grew only 0.8%, while real earned or labor income fell 2.1%-2.2% for a second consecutive quarter, the steepest second-quarter decline in six years. Bottom-quintile income rose 7.5%, compared with 4.3% for the top quintile in updated figures. Real consumption expenditure increased just 0.4%, while nominal spending rose 3.4% to ₩2.932 million and the household surplus increased 9.6%. The average propensity to consume fell to 69.2%. High prices, a high won exchange rate, rising housing costs and household interest expenses that increased 12.1% restrained discretionary spending, while the temporary nature of the support and seasonal effects make the improvement in distribution uncertain.

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