The price of essential foods such as rice and eggs is rising rapidly... “August and September are more severe”
“Review of reflection of prices perceived by low-income people when calculating welfare benefits”
(Sejong = Yonhap News) Reporter Kim Soo-hyun = In the second quarter of this year, the food cost burden of low-income groups, including groceries and eating out, was found to have increased more significantly than that of the middle- and high-income groups.
It is pointed out that as the burden of essential consumption expenditures such as food costs increases, the spending power of low-income people may have decreased.
According to the National Statistics Portal (KOSIS) on the 30th, the average monthly food expenditure of all households in the second quarter of this year was 891,000 won, up 3.3% from a year ago.
In detail, expenditures on groceries and non-alcoholic beverages were calculated to be 434,000 won, and meal expenses, including eating out, were 457,000 won.
By income, food expenditures for the bottom 20% to 40% of income quintiles averaged 657,000 won per month, up 6.9% from a year ago, showing the steepest increase among all income quintiles.
The average monthly spending on groceries and non-alcoholic beverages in the second quintile was 344,000 won, and meal expenses were 312,000 won.
The growth rate of food expenses in the second quintile was more than twice the overall average.
The second quintile was followed by the first quintile, which increased by 6.1%. The first quintile spent an average of 473,000 won per month on food.
The average monthly spending on groceries and non-alcoholic beverages was 289,000 won and meal expenses were 184,000 won, respectively.
The growth rate of the fourth quartile (KRW 1,108,000), which had the third highest growth rate, was 3.1%, which was only half that of the second quartile, the first quintile.
The 3rd quartile (KRW 841,000) had the next highest growth rate at 2.0%, and the 5th quintile (KRW 1,378,000) had the lowest growth rate at 1.8%.
The food cost burden compared to total household expenditure was highest in the first quintile at 30.3%. It rose 0.2%p from a year ago.
The next quintile was 27.2%. The second quintile expanded by 1.0%p.
In the lowest quintile, this rate was only 17.8%. Even that decreased by 0.4%p from a year ago.
The reason the food cost burden for low-income people has increased appears to be because food prices have risen, but consumption has not been significantly reduced since it is essential consumption.
In the second quarter, the price increase of food ingredients and seasonings that frequently appear on the table was noticeable, such as rice (13.2%), potatoes (11.1%), green onions (10.0%), soy sauce (9.3%), and eggs (9.0%).
In particular, rice has continued to show double-digit growth for four consecutive quarters, and eggs, a cheap and convenient source of protein, have also seen a steep rise throughout this year due to a supply hit due to the avian influenza (AI) outbreak last winter.
The prices of inexpensive restaurant menu items such as triangular kimbap (4.0%), tteokbokki (4.0%), jajangmyeon (3.9%), and hangover soup (3.8%) also appear to have increased the burden on low-income families, as they were higher than the overall consumer price inflation rate in the second quarter (3.0%).
Kim Kwang-seok, head of the economic research department at the Korea Economic and Industrial Research Institute, pointed out, "Even in August and September, food prices may rise sharply due to seasonal factors (heatwaves, heavy rain, etc.) and timing factors before the Chuseok holiday. Supply may decrease and demand may increase," adding, "The food price inflation trend may become more severe, especially for low-income groups."
He said, “What is concerning is that as the possibility of low-income households becoming dependent on debt increases, coupled with an interest rate hike, the price and debt burden of low-income households may increase further.”
Kim Jeong-hwan, associate research fellow at the Korea Institute of Public Finance, also pointed out that low-income single-person households are vulnerable to high inflation shocks in a recent report titled ‘Application of Revealed Preference Estimation: Analysis of Household Welfare Changes Due to Price Changes.’ The analysis was that this was because low-income households had a consumption structure centered on essential goods such as food and housing costs.
Deputy Research Fellow Kim suggested in the report, "When calculating welfare benefits linked to the consumer price inflation rate, such as basic pension and basic livelihood security benefits, there is a need to consider a plan to reflect the actual inflation rate actually experienced by low-income households instead of the overall consumer price inflation rate."
[Table] Household expenditure and food cost burden by income quintile in the second quarter
monthly income
Household balance by quintile Amount by item Food cost burden compared to household expenditure Total average household expenditure 3,992,749 22.3% Food and non-alcoholic drinks (A) 434,477 Meal cost (B) 456,940 Food cost burden (A+B) 891,417 First quintile household expenditure 1,560,259 30.3% Food Non-alcoholic beverages (A) 289,222 Meal expenses (B) 183,926 Food expense burden (A+B) 473,148 2nd quintile Household expenditure 2,409,429 27.2% Food and non-alcoholic beverages (A) 344,304 Meal expenses (B) 312,226 Food expense burden (A+B) 656,530 3rd quintile Household expenditure 3,503,100 24.0% Food and non-alcoholic beverages (A) 390,493 Meal expenses (B) 450,150 Food cost burden (A+B) 840,643 Fourth quartile Household expenditure 4,760,553 23.3% Food and non-alcoholic beverages (A) 525,397 Meal expenses (B) 582,807 Food cost burden (A+B) 1,108,204 Fifth quintile household expenditure 7,728,851 17.8% Food and non-alcoholic beverages (A) 622,890 Meal cost (B) 755,422 Food cost burden (A+B) 1,378,312
※ Reorganized data from the National Statistics Portal (KOSIS) of the National Data Agency
