A family of four spent an average of nearly 2 million won per month on food and housing in the first quarter, data showed. The result stems from housing costs surging more than 20 percent from a year earlier, driven by a sharp rise in jeonse (a Korean lease system requiring a large lump-sum deposit instead of monthly rent) and monthly rent prices. Food costs rose 5 percent over the same period, but the growth in earned income fell far short, adding to the burden on households.
An analysis of the National Data Integration Platform (MDIS) released Thursday showed that the average monthly food cost for a family of four — including groceries, non-alcoholic beverages, and dining out — totaled about 1.42 million won in the first quarter of this year. That marks a 5.4 percent increase from 1.34 million won a year earlier. Dining-out costs in particular rose 9.4 percent, leading the increase.
Housing costs rose even more steeply amid recent gains in Seoul home prices and rents. The average monthly housing cost for a family of four reached 570,000 won over the same period, up 20.6 percent from 470,000 won a year earlier. According to KB Real Estate's monthly housing time series, Seoul apartment jeonse prices rose 6.77 percent and monthly rents climbed 8.99 percent in the year from May last year to May this year.
As a result, the combined average monthly spending on food and housing rose to about 1.99 million won this year from 1.82 million won last year. This means a family of four is spending around 2 million won per month on food and housing-related costs.
Income growth, by contrast, was relatively slow. The average monthly earned income for a family of four was 6.46 million won in the first quarter of this year, up just 1.9 percent from 6.34 million won a year earlier. Average monthly earned income across all households rose 0.3 percent, indicating that wages effectively barely increased. The figure fell short of both the food cost growth rate of 5.4 percent and the housing cost growth rate of 20.6 percent.
The burden felt by households is also tied to recent inflation trends. Last month's consumer prices rose 3.1 percent from a year earlier, the largest increase in two years and two months. In particular, the fallout from the Middle East war drove up not only petroleum products by 24.2 percent but also food prices, including rice by 13.5 percent, eggs by 10.2 percent, and pork by 5.8 percent. Core inflation, which excludes food and energy, also rose 2.5 percent, with price pressures appearing to spread across the broader economy.
In response, the government has expressed concern over the growing burden on people's livelihoods in its recent assessment of economic conditions. The Ministry of Economy and Finance said in the June edition of its "Recent Economic Trends (Green Book)" released Thursday that "the recovery momentum continues, with strong exports and improving consumer and business sentiment, but concerns remain over livelihood burdens such as price increases and an employment slowdown, amid continued uncertainty from the Middle East war and other factors."
Indeed, recent major economic indicators have shown mixed signals. Exports in May rose 53.2 percent from a year earlier, supported by increased exports of semiconductors, computers, and ships. Consumer and business sentiment also improved, and both the leading and coincident economic indicators continued their upward trend.
The labor market, by contrast, appears somewhat weakened. The number of employed people last month fell by 40,000 from a year earlier, turning negative for the first time in 17 months. That is the backdrop to the government newly mentioning an "employment slowdown" in this Green Book, instead of the previous "downside risks to the economy." The phrase "employment slowdown" was used for the first time since the January edition last year, during the aftermath of the emergency martial law.
A high exchange rate is also cited as a factor adding to livelihood burdens. The government said Thursday that the recent rise in the won-dollar exchange rate could stimulate import prices, placing a burden on inflation, livelihoods, and domestic demand.
Experts point out that price stability is more important than anything else for the warmth of the economic recovery to actually reach households. Even if exports rise and corporate earnings improve, a continued increase in essential household spending could reduce consumption capacity and delay a recovery in perceived economic conditions. Lee Eun-hee, a professor of consumer science at Inha University, said, "With the burden of essential spending such as food and housing already significantly elevated, the impact of a high exchange rate could be added in the second half." She added, "If the rise in the exchange rate is sequentially reflected in food raw materials, energy, and dining-out costs, stimulating living prices, the burden of essential spending such as food and housing could grow further, and consumption capacity could shrink."
