Household spending rose 0.4% in Q2 as 600 billion won in high-oil-price relief payments were distributed; inflation and interest burdens increased

[Financial News] Household income and spending both rose in the second quarter, boosted by tens of thousands of won in high-oil-price relief payments distributed to the public in the first half of the year. However, real income rose only 1.5%, and real consumption spending increased just 0.4%, as inflation and interest burdens weighed on households. Real earned income fell as wage growth slowed despite sharp price increases. One-off support payments, which were concentrated more heavily among lower-income households, also narrowed the apparent income gap in the data. Households that received the payments spent more on meat and health supplements, while reducing spending on alcohol and tobacco. Fixed housing costs such as rent rose sharply.
The Ministry of Data and Statistics said on the 27th that average monthly household income, in nominal terms and including inflation, rose 4.5% from a year earlier to 5.295 million won in the second quarter of 2026, according to the Household Income and Expenditure Survey.
Real income, which excludes the effects of price changes, increased 1.5%. That was roughly in line with the level seen in the second half of last year. In the first quarter of this year, it rose only 0.4%.
Park Sun-ok, head of the household income and expenditure division at the Ministry of Data and Statistics, said, "Total income in the second quarter increased across earned income, business income and transfer income, marking the 12th straight quarter of growth." She added, "A notable factor was the sharp increase in public transfer income, driven by the high-oil-price relief payments distributed from April."
Among income categories, transfer income posted the largest increase, up 20.4% to 931,000 won. That was the biggest jump since the second quarter of 2022, when pandemic-related support payments surged 37.5%.
The increase reflected a 27.6% rise in public transfer income, driven by the high-oil-price relief payments of 100,000 to 600,000 won per person for the bottom 70% of income earners under the supplementary budget for the first half of the year. That was the largest increase since the third quarter of last year, when livelihood recovery consumption coupons were distributed, which pushed the figure up 40.4%.
The government has paid out more than 6 trillion won in total to about 35 million people since May under the high-oil-price relief program.
Earned income came to 3.218 million won, while business income reached 977,000 won, up 0.8% and 3.8%, respectively, from a year earlier. Earned income has now increased for 11 consecutive quarters.
However, real earned income fell 2.1% as the broader economic slowdown and weaker wage growth took a toll. It declined for a second straight quarter after falling 1.7% in the first quarter of this year. The drop was the steepest since the first quarter of 2024, when it fell 4.0%.
Spending also increased.
Consumption spending in the second quarter rose 3.0% from a year earlier to 3.993 million won, marking the 22nd consecutive quarterly increase since the first quarter of 2021. Real consumption spending, adjusted for inflation, rose only 0.4%. It had returned to positive territory in the fourth quarter of last year, when it rose 1.2%, and then climbed to 3.1% in the first quarter of this year.
Consumption spending reached 2.932 million won, up 3.4%, while non-consumption spending rose 1.9% to 1.06 million won.
By category, spending on household goods and household services posted the largest increase, up 17.9%. That was the biggest rise since 2020.
In particular, spending on appliances and household devices surged 40.1% thanks to a special Samsung Electronics home appliance sales event held in the second quarter. Education spending rose 3.0% on private tutoring and cram schools.
Housing-related spending increased 3.0%, with actual housing costs such as rent and other housing-related services rising 7.3% and 7.9%, respectively.
Spending on alcohol and tobacco fell 2.2%.
Among non-consumption expenses, interest payments borne by households rose sharply by 12.1% as rate hikes continued. Social insurance spending also increased 5.6%.
Disposable income, which is income minus non-consumption spending, averaged 4.235 million won per household per month, up 5.2% from a year earlier. However, the average propensity to consume, which measures consumption spending as a share of disposable income, fell 1.2 percentage points from a year earlier to 69.2%.
The income gap narrowed in the data.
The average monthly income of first-quintile households, or the bottom 20%, rose 7.5% from a year earlier to 1.283 million won. Their disposable income also increased 7.5% to 1.094 million won, reflecting the impact of the high-oil-price relief payments and other fiscal support for low-income households.
Over the same period, the average monthly income of fifth-quintile households, or the top 20%, rose 3.8% to 11.15 million won. Their disposable income increased 4.3% year on year to 8.621 million won. In particular, fifth-quintile households saw business income rise 11.0% and property income climb 18.7%, while earned income fell 1.7%. The decline reflects slower wage growth at many large companies outside the semiconductor sector, which is enjoying a boom.
The quintile ratio for equivalized disposable income, a measure of income distribution, fell 0.48 points from a year earlier to 4.97. That is the lowest level since the related statistics began in 2006.
The ratio usually fluctuates between 5 and 7, depending on seasonal factors and policy changes, but this is the first time it has fallen into the 4 range. It had surged to 6.59 in the first quarter, when bonuses at major companies, especially in the semiconductor industry, were paid out. A lower ratio generally indicates improved distribution.
Park said, "The increase in income among first-quintile households was driven by a sharp rise in public transfer income, including the high-oil-price relief payments." That means the improvement was largely due to a one-off fiscal injection by the government, rather than a virtuous cycle of economic growth driven by more jobs and higher earned income.

[email protected] Jung Sang-gyun Reporter