Economic Blues Boost Card Spending
Online Shopping Also Hits Record High
By Lee Hyo-sik
Staff Reporter
Consumers are spending more on credit and debit cards as they are being forced to pay more for gasoline and other goods as a result of high international crude oil and other imported commodity prices. Many households have also become unable to make ends meet amid slowing income growth and high inflation, relying more on their cards to pay for basic goods and services.
Rising auto fuel costs have made more families shop online rather than drive private vehicles to department stores or discount retailers, pushing up cyber transactions to an all-time high.
According to the Credit Finance Association (CFA) Friday, card spending, excluding cash advanced services, totaled 196.8 trillion won in the first eight months of the year, up 20.6 percent from the same period last year. In August alone, Koreans spent 24.8 trillion won on credit and debit cards, up 19 percent from a year earlier.
In July, the monthly amount of card spending rose to an all-time high of 26.4 trillion won since the association began tracking records in 2003.
``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. Many consumers who do not have cash in hand amid slowing income growth and stagnant business conditions used credit cards to purchase goods and services,'' a CFA official said.
The official also said card issuers have campaigned hard to attract more customers by offering a wide range of incentives since the beginning of the year, further boosting card spending.
According to the National Statistical Office (NSO) Tuesday, consumer prices rose 5.6 percent last month from a year earlier. The cost of living index, consisting of food and other daily necessities, jumped 6.6 percent from a year ago, meaning that consumers felt the inflation burden more heavily than the overall price increase.
With soaring oil prices, a growing number of Koreans are doing business and shopping in cyberspace for cost savings and convenience. The statistical office said Friday that commercial transactions via the Internet amounted to 156.8 trillion won in the second quarter, up 24.6 percent from a year ago. The figure is the largest quarterly transaction since the statistical office began collecting the data in 2001.
Business-to-business (B2B) transactions accounted for 89.9 percent, or 141 trillion won, of total e-commerce in the April to June period, jumping 24.8 percent from a year earlier. Business-to-government deals also rose 25 percent to 11.5 trillion won, while business-to-consumer (B2C) transactions totaled 2.7 trillion won, up 16.3 percent.
Among B2C deals, sales of processed food items and beverages rose 43 percent to 235 billion won from a year earlier. Families also spent 102 billion won to buy agricultural and fisheries products, up 30.4 percent, indicating more consumers chose to shop online rather than drive to stores because of high gasoline and other fuel prices.