By Kim Jae-kyoung
Staff Reporter
Despite a deepening economic downturn, Korean individuals' credit card payments for the purchase of goods hit a record high in July, due to a rise in prices of daily necessities caused by consumer price hikes.
According to the Credit Finance Association (CFA), the amount of credit card spending, excluding cash advance services, reached 26.44 trillion won in July, up 22.68 percent from a year ago.
It was the largest monthly amount since the central bank began tracking records in 2003. The amount came to 24.18 trillion won in June, 25.27 trillion won in May and 24.69 trillion won in April.
The July amount brought the annual figure to 172.21 trillion won, up 20.68 percent from the same period last year.
``The increase was mainly due to a rise of the absolute amount of credit card spending caused by a hike in prices of daily necessities,'' a CFA official said.
``Besides, credit card use is gaining popularity as card firms provide cardholders with various benefits,'' he added.
Consumer prices rose 5.9 percent year-on-year in July, the fastest growth pace in 10 years, up from a 5.5 percent gain a month ago. Producer prices gain also hit a 10-year high last month, with prices increasing 12.5 percent.
``Although prices have been on an upward trend, high-income earners' spending on luxurious goods has remained strong, which was the key reason for the increase in card spending,'' said an economist at Samsung Economic Research Institute.
``Also, more people are using credit cards as they are experiencing a cash shortage problem amid an economic downturn,'' he added.
Private spending contracted in the first quarter for the first time in four years. Industrial output grew only 6.7 percent in June year-on-year, the slowest growth in nine months.
kjk@koreatimes.co.kr
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