Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
As Christmas nears, people feel growing income disparity
A customer looks at a Christmas display in The Hyundai Seoul in Yeouido, Seoul, Nov. 9. Yonhap
By Lee Yeon-woo
'Is everyone that rich?'
A 33-year-old man, who asked to be identified only by his surname Choi, recently experienced a rude shock while trying to make a reservation for Christmas at a restaurant in Seoul. In his view, the price and conditions for booking were ridiculous. He found the situation to be similar at other restaurants he checked too.
"I felt like the world was playing a joke on me. Restaurants make so many demands during the Christmas season. To reserve a seat, you must order a bottle of expensive wine or food at a significant price," Choi said.
"The most baffling part is that people still rushed to book the place. Is everyone that rich?"
Despite the economic recession, the price of products and services related to Christmas — such as food, accommodation, and performances — are consistently rising following demand.
As of Tuesday, data from Statistics Korea indicated that items typically consumed during Christmas were already averaging an inflation rate of 3.8 percent in October, even before the full onset of the holiday season.
The prices of chocolate, cake and liquor, commonly given as Christmas presents, witnessed increases of 14.9 percent, 8.3 percent and 5.1 percent, respectively, compared to the previous month. Similarly, entertainment options have also seen a price surge. Hotel accommodation fees have experienced a 5 percent rise, while the cost of performing arts has gone up by 6.3 percent during the same period.
Customers look at a Christmas-themed store at The Hyundai Seoul in Yeouido, Nov. 9. Yonhap
Many people also tend to travel overseas during the Christmas season. The transaction volume for overseas accommodation during the period showed an approximately 11.4-fold increase compared to the previous year, according to Yeogi Eottae, a domestic accommodation booking platform.
"It's the first Christmas after the pandemic. The desire to celebrate it contributed to advancing the timing of accommodation bookings," an official from Yeogi Eottae said.
Christmas fever exemplifies the growing consumption polarization in Korea, driven partly by income disparity.
During the third quarter of this year, while the highest-earning 20 percent of households brought in 10.84 million won ($8,377) a month, the income for the lowest 20 percent actually shrank to just 1.12 million won. Consequently, the lowest 20 percent bracket cut their expenses by 0.7 percent, even as spending increased across all other income groups.
Hyundai Research Institute economist Lee Hyung-suk also noted the changes in consumption patterns.
"Consumers cut costs by buying only essential items in smaller quantities or purchasing secondhand products, and use the saved money to purchase ultra-luxury goods and services," Lee wrote in his recent research. "The polarization of consumption patterns raises the possibility that products and services falling outside the ultra-low or ultra-high price categories may be overlooked by customers."
Meanwhile, financial authorities are increasing their vigilance, as Christmas introduces a new factor to already-rising consumer prices.