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Even wealthy families tighten purse strings amid economic slump

All News 09:39 January 11, 2017

SEOUL, Jan. 11 (Yonhap) -- South Koreans, both poor and rich, are tightening their belts with no economic recovery in sight and the prices of goods ascending, data showed Wednesday.

The spending-to-income ratio of local households hit a record low despite stagnant wage levels.

Department stores and duty-free shops, two routine shopping spots for the wealthy, are not immune to the frosty consumer sentiment.

According to the Statistics Korea, the average monthly income of a household here with two members or more stood at 4.37 million won (US$3,643) in 2015. They spent only 2.56 million won, or 58.6 percent.

It marks the lowest since related data were first compiled in 2003.

A consumer pays in cash at a South Korean market in a file photo provided by Yonhap News TV. (Yonhap)

The ratio was 58 percent in the third quarter of last year, continuing to drop from 64.6 percent in 2003, 63 percent in 2010 and 59.3 percent in 2014.

The spending-to-income ratio of the bottom 10 percent of income earners came to 96.3 percent in 2015, the first time that the figure fell below 100 percent.

That of the top 10 percent of income earners also dipped to 45.1 percent in 2015 from 50.3 percent in 2005 and 48.2 percent in 2010.

A scene at Lotte Department Store in Seoul in a file photo. (Yonhap)

Analysts attribute the trend to low expectations of an economic recovery anytime soon and a lack of income growth.

"As consumer prices are climbing in earnest this year, a negative impact is inevitable on consumer sentiment and spending," said Park Jong-ryul, a senior researcher at HMC Investment Securities Co.

He pointed out local retailers dealing in luxury goods feel the pinch as well, citing a recent plunge in the share prices of department stores and duty-free shop owners.

Hyundai Department Store Co. shed 0.91 percent to finish at 98,500 won on Tuesday.

Shinsegae Co. and Hotel Shilla Co. dipped 0.88 percent and 3.15 percent, respectively, to 168,000 won and 46,100 won.


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