Real income for middle income class reduced from inflation

Taking out the impact from inflation hike, the middle class workers’ income went down year-on-year in the first quarter of the year. As the June consumer prices jumped up to 6 percent, concerns are rising that the real income may drop even further.

According to the Statistics Korea on Wednesday, the monthly average real income of the bottom 20~40 percent (2nd quartile) income bracket among the city dwellers in the first quarter, is aggregated at 3.11 million won. This is a 1.6 percent decline from that of one year ago. The real income in the third quarter (bottom 40~60 percent) and the fourth quarter (bottom 60∼80 percent) dropped 1.0 percent and 2.8 percent year-on-year, respectively.

The real income is the income index that eliminates the inflation impact. The income for 2~4 quartiles who are workers classified as the middle class did not rise as much as inflation hike. The nominal income, which did not eliminate price hike impact, has risen 0.9∼2.8 percent for 2~4 quartiles than one year ago.

The real income dropping trend for the middle class city workers is expected to continue for the time being. This is because the inflation hike, which recorded 3.8 percent in the first quarter of the year, rose to 5.4 percent in the second quarter. The consumer price hike rate entering 5 percent level is first since the third quarter of 2008 (5.5 percent).


Hee-Chang Park ramblas@donga.com