韓國央行-高物價與消費：關注家庭消費籃子和金融資產的異質性影響（英）

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Ⅱ.KeyIssues

HighPricesandConsumption:WithaFocusontheHeterogeneousImpactoftheHouseholdConsumptionBasketandFinancialAssets

KEYTAKEAWAYS

I.After2021,thecumulativeconsumerpriceinflationwas12.8%(3.8%annually),more

thandoubletheaverageofthe2010s(1.4%annually).Inparticular,inflationcontinuedtoriseatafasterpacein2021and2022asglobalsupplyshockscoincidedwithdemandpressuresfromtheeasingofepidemicpreventionmeasures.

II.Priceincreasesaffectprivateconsumptionthroughthefollowingpaths:①reducing

households’realpurchasingpowerand②reducingtherealvalueoftheirassetsandliabilities.Thesepathsproducedifferentresults,dependingonthecompositionoftheitemsconsumedbyhouseholds(consumptionbasket)andfinancialconditions.

①Realinflationrate,whichreflectstheconsumptionbasketofhouseholds,wasfoundtobehigherfortheelderly(16%,2020-2023)andlow-income(15.5%)groups,whichhaveahighershareofessentialgoodssuchasfoodintheirbasketthanotherhouseholds(14.3%fortheyoungandprime-agedand14.2%forthehigh-incomegroup).However,itappearsthatthesevulnerablegroupshavebeenmitigatedthecontractionofconsumptionduetoanincreaseinpublicincometransfers.

②Thenegativeeffectofadeclineintherealvalueofhouseholds’financialassets(andliabilities)duetopriceincreases*wasmorepronouncedamongtheelderly(financialassets)andthoseintheir30swithjeonse(leaseholddeposits).Ontheotherhand,whilehouseholdsholdingmortgageloansmayhavebenefitedfromtheinflationaryerosionoftherealvalueoftheirliabilities,mostofthesebenefitsappeartohavebeenoffsetbyrisinginterestpaymentsinthecontextofinterestrateincreasesaimedatcontaininginflation.

*Thenetnominalposition(NNP),whichmeasuresthenetfinancialwealthofhouseholds,fallsaspricesrise.

III.Accordingtoamodel-basedquantitativeanalysis,priceincreasesreducedconsumption

growthbyabout4%p*in2021and2022byreducingrealpurchasingpower.Althoughthemagnitudeoftheincreasehasmoderatedsince2023,inflationisstillafactorofthedeclineinhouseholdconsumption.Inaddition,changesintherealvalueofhouseholds’financialassetsandliabilitiesfurtherreducedconsumptionin2021and2022(byaround1%p).

*Thecumulativesumof2021and2022relativetothefourthquarterof2020.Overall,consumptionincreasedby9.4%overthesameperiod.

IV.Goingforward,asinflationdecelerates,theextenttowhichhouseholdconsumptionis

constrainedbyhighpriceswillmoderate.Highpricesnotonlyreducehouseholds’realpurchasingpower,butalsohaveanegativeredistributiveeffectonincomebyexacerbatingeconomicdifficultiesinvulnerablepopulations,whichiswhyitisnecessarytomaintainpricestability.

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I.Background

1.Althoughconsumption,whichhasbeensluggishsincethepandemic,isshowingsignsofrecoverythisyear,itremainswellbelowitshistoricaltrend.Inparticular,theconsumptionofgoods,whichpeakedinthethirdquarterof2021andthenbegantodecline,hasbeensluggish,leadingtoanoverallslowdowninprivateconsumption.Whilesomestructuralfactors

99

arelikelytohavecontributedtothislacklusterconsumptionofgoods,therepeateddisruptionstoglobalsupplychainssince2021andaccumulationofhighpricesduetoextremeweatherandotherfactorsarelikelytohavehadasignificantimpact.Ingeneral,wheninflationisstable,smootheconomicactivityincreasesconsumptionandpricesrise(virtuouscycleofrisingpricesandconsumption).However,ifanegativesupplyshocktotheeconomycausesjittersininflationexpectations,inflationrisesandconsumptionfalls(risingpricesandfallingconsumption).

2.Forindividualhouseholds,theactualmagnitudeofpriceincreasesmayvarydependingontheirconsumptionitemsandthecompositionoftheirassetsandliabilities,whicharelikelytohavedifferenteffectsonthechangeinconsumption.Thissectionexamines:①whetherconsumptionhasbeenaffectedbypriceincreasesbyreviewingtherecentevolutionofinflationandprivateconsumptionand②thedifferentialimpactofpricerisesondifferenthouseholdconsumptionbasketsandasset/liabilitycompositionstodeterminewhichhouseholdshavebeenmostaffected.Indoingso,itassesses③theimpactofpriceincreasesonconsumptionandderivesimplications.

Post-pandemicconsumptionhasshownweakrecovery,withrecentsignsofresuming

recovery

Figure1.GDPprivateconsumptiontrend1)

andvariation

Note:1)Dottedlineisthetrendfor2015to2019.Sources:BankofKorea,StatisticsKorea.

Goodsconsumptioncontinuestofall,whileservicesconsumptionisapproachingthe

trendline

Figure2.Consumptionofgoodsandservices

Note:1)Dottedlineisthetrendfor2015to2019.Source:BankofKorea.

99Asthepropensitytosaverisesinthefaceofpopulationaging,thetrendlineofprivateconsumptionislikelytogradually

flatten,*and,morerecently,asthenumberofsingle-personhouseholdsincreases,theconsumptionofgoodssuchasfoodisbeingreplacedbytheconsumptionofservices(home-deliveredfood,eatingout,etc.).However,thesestructuralchangesinconsumptionarenotanalyzedinthissection.

*PrivateconsumptionasashareofGDP:53%in2000s→49%in2010s→46%in2020-2021→49%in2022-2023

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Ⅱ.InflationandConsumptionafterthePandemic

3.Consumerpriceinflationhasrisensharplysince2021,morethandoublingitspaceinthe2010s.Inparticular,in2021and2022,pricesremainedelevatedduetotheoverlappingofvariousinflationarypressures,includinghighercommoditypricesduetoglobalsupplybottlenecks,theRussia-Ukrainewar,andrisingdemandpressureswiththeeasingofcontainmentmeasures.Intermsofinflationovertheperiod,pricesroseby12.8%overthe40monthsfromJanuary2021tothepresent,morethandoubletheaverageincreaseoverthesameperiodinthe2010s(5.5%).Inparticular,pricesofgoods

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haverisenalmostthreetimesfasterthaninthe2010s,andthecontributionofgoodsandservicestoinflationhasrecentlyreversed(Figure3).Goodspricesaccountfortwo-thirds(4.9%p)ofexcessinflation(7.3%p)relativetothepastsince2021(Table1).

Consumerpriceshavebeenrisingfastersince2021

Figure3.Cumulativeinflation1)andcontributionofgoodsandservices

Note:1)Sumofmonth-on-monthinflationratesfromJanuary2010toApril2024.

Sources:StatisticsKorea,ResearchDepartmentoftheBankofKorea.

Contributionofgoodstoinflationisgreaterthanthatofservices

Table1.Comparisonofcontributionsto

(%,%p)

Jan.2021

toApr.2024

2010s

[A-B]

[A]

(40months)

[B]

(convertedto40-

monthperiod)

CPI

12.8

5.5

7.3

Goods

15.8

5.5

10.3

[44.8]Services

(7.3)10.3

(2.4)5.6

(4.9)

4.7

[55.2]

(5.5)

(3.1)

(2.4)

cumulativeinflation1)

Note:1)Numbersin[]areweightsofitemsofCPIin2022,whilenumbersin()arecontributions.

Sources:StatisticsKorea,ResearchDepartmentoftheBankofKorea.

4.Thesehigherpricesexceededcustomers’initialexpectations,andfrom2022,therateofimprovementinhouseholdpurchasingpowerfailedtokeepupwiththerateofincreaseinprices.

Beforethepandemic,theCPIwas1to2%pbelowinflationexpectations,butin2021and2022,consumerpriceinflationexceededexpectations.Asaresult,thenumberofInternetsearchesfortheword“prices”rosesharplyduringtheperiod,reflectingasignificantincreaseinconsumerconcernsaboutprices.Householdconsumptioncapacity,asmeasuredbytotallaborincome,appearstohavebeeninsufficienttocompensateforthehighinflationduringthisperiod.Giventhatnominalpurchasingpowerexceededinflationbyaround4%pinthe2010s,itislikelythathouseholds’realconsumptioncapacitywaslimitedduringthisperiod,wheninflationwasslightlyaboveorsimilartothegrowthrateofnominalpurchasingpower.

100Goods=non-coregoods(food,energy)+coregoods;Services=coreservices+housingrents

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In2021and2022,consumerpricesexceededhouseholds’inflationexpectations

Householdconcernaboutpricesrisessharply

Paceofimprovementin

households’purchasing

powerhasslowedsince2022

Figure4.Trendofinflation

expectations1)

Note:1)Inflationexpectationsoneyearahead.

Sources:BankofKorea,StatisticsKorea,Consensus

Economics.

Figure5.Trendofsearchterm

‘prices’1)

Note:1)Frequencyofsearchesfor

‘prices’.

Sources:Naver,Google.

Figure6.Per-capitapurchasing

power1)andinflation

Note:1)Nominalwages×numberofemployees/totalpopulation.

Sources:StatisticsKorea,ResearchDepartmentoftheBankofKorea.

5.Lookingatthetrendofpricesandconsumptionofgoodsandservices,theconsumptionofgoodsismoreaffectedbypricesthantheconsumptionofservices.Since2021,thepersistentsupplyshockcausedpricestorisesharplyandconsumptionofgoodstofall,resultinginanegative(-)relationshipbetweenpricesandconsumption.Morerecently,withthemoderatingimpactofsupplyfactors,goodsinflationhasbeengraduallydecelerating,andthesluggishconsumptionofgoodsisshowingsignsofeasing,butpricesarestillrestrictivecomparedwiththepast.

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Ontheotherhand,servicesconsumptionrosealongwithprices(movingupandtotheright),withaspikeinpent-updemandafterthereopening,andsincelastyear,asdemandpressureshaveeasedduetohigherinterestrates,bothconsumptionandservicepriceshaveslowed(movingdownandtotheleft)andarelikelytobeclosetotheirhistoricalaverages.

In2021and2022,goodsconsumptionandpriceshadastronginverserelationship

Figure7.GoodsconsumptionandgoodsCPI

Sources:BankofKorea,StatisticsKorea.

Servicesconsumptionandpricesnormalizeafterasurgeinpent-updemand

Figure8.Servicesconsumptionandservices

CPI

101Lookingattheconsumptionofgoodsindetail,non-durables,inparticular,havebeenmoresluggishthandurablesandsemi-durables.Asfornon-durables,therecentdecreaseintheconsumptionofnon-durablesisunusual,giventhatnon-durablesconsistofnecessitiessuchasfoodandfuel,andthustheirpricestendtorisegraduallywithrelativelylowvolatility.Fordetails,seeBox1.“SluggishConsumptionofNon-durableGoodsinKoreaandMajorCountries.”

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6.Thelinkbetweenafurtherslowdowninconsumptionandhigherinflationwasmorepronouncedforgoodsthanforservices.Lookingatthechangeinconsumptionandpricesinmajorcountriesfrom2021torecently(Q42023),consumptiondeclinedoverallincountrieswheregoodsinflationwashigh.Thepricesofgoods,whichoccupyahighshareoftrade,rosesharplyinmostcountriesduetodisruptionsinglobalsupplychains.Asaresult,theconsumptionofgoodsfellinmanycountries,leadingtonegativegrowth,includingKorea(Figure9).Thus,inthegoodssector,thehighertheinflation,thegreaterthecontractionofconsumption.Ontheotherhand,incountrieswhereservicesconsumptiongrewstrongly,inflationwashigher,showingapositive(+)relationshipbetweenpricesandservicesconsumption,whichindicatesthatgrowthinservicesconsumptionaddedtoinflationarypressures.

Bycountry,theinverserelationshipbetweenconsumptionandpricesisalsostrongerforgoodsthanforservices

Figure9.Goodsconsumptionandprices1)inFigure10.Servicesconsumptionandprices1)

majorcountries2)inmajorcountries2)

Notes:1)Estimatedonthebasisofgrowthratesofdeflatorsofconsumptionofgoodsandservicesinthetwoperiods.

2)18OECDcountriesforwhichtimeseriesdataonconsumptionofgoodsandservicesareavailable.

3)Shareofgoodsconsumption(Q42023,%):Average:44;Minimum:33(UnitedStates);Maximum:54(CzechRepublic);Korea:41.

Source:OECD.

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Ⅲ.HeterogeneityintheImpactofPricesbyHousehold

Characteristics

7.Theimpactofpriceincreasesonhouseholdscanvarydependingon①thecompositionofconsumptionitemsbyhousehold(consumptionbasket)and②financialassetsandliabilities.ThissectionexaminestheimpactofpriceincreasesbyhouseholdcharacteristicsusingmicrodatafromtheHouseholdIncomeandExpenditureSurveyofStatisticsKoreaandSurveyofHouseholdFinancesandLivingConditions.

Ⅲ-1.EffectiveInflationConsideringHouseholdConsumptionBaskets

8.First,effectiveinflation,takingintoaccountthehouseholdconsumptionbasket,isfoundtoberelativelyhigherinvulnerablepopulationssuchastheelderlyandlow-incomegroups.

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Inparticular,thecumulativeinflationexperiencedbytheelderlygroup(60sandolder)from2020to2023wasabout2%phigherthanthatofotheragegroups(Figure11),mainlyduetothesignificantlyhighershareofnecessitiessuchasfoodandenergy,whichhaveriseninpricesharply,intheirconsumptionbaskets(Figure14).Forsimilarreasons,effectiveinflationtendstobehigherforthelow-incomegroup

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(Figures12and15).However,forthoseintheir30sandyounger,effectiveinflationdoesnotvarymuchwithincomelevel(Figure13).Thisislikelyduetothefactthat,whiletheshareofeducationandhealthcareincreaseswithincomeforotheragegroups,therearenotlargedifferencesinconsumptionbasketsbyincomelevelamongpeopleintheir30sandyounger,andtheshareoffoodservices,whichhaveasignificantspillovereffectonoverallfoodprices,ishigh.

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Theelderly>youngandprime-aged

Figure11.Cumulative

effectiveinflationbyage

group1)

Low-incomegroup>high-incomegroup

Figure12.Cumulative

effectiveinflationbyincome

quintile1)

Differencesineffective

inflationbyageandincome

Figure13.Cumulative

effectiveinflationbyage

groupandincomequintile2)3)

Notes:1)Q4ofeachyear.

2)Cumulativeinflationfor2020to2023;ageandincomein2023.

3)Figuresin[]andwithinbarsindicatethegivengroup’sshareoftotalhouseholds.Source:StatisticsKorea.

102Yooetal.(2024)usedcreditcarddatatoestimatetheeffectiveinflationforindividualsandfoundthattheeffectiveinflationforhigh-incomehouseholdswaslowerthanforotherincomegroupsbetweenJanuary2016andJanuary2022.

103Theelderlyaccountforahighproportionofthelow-incomegroup,withthoseaged60andolderaccountingfor62%and39%ofthefirstandsecondincomequintiles,respectively.

104Consumerpriceinflationformajoritemsfrom2020to2023(cumulative,%):food23.5,energy24.1,eatingoutservice18.3

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Consumptionbasketvariesacrossagegroups

andacrossincomedistribution,

leadingtodifferenceineffectiveinflation

Figure14.Consumptionitems

acrossagegroups1)

Figure15.Consumptionitems

acrossincomequintiles1)

Figure16.Decompositionofcumulativeeffectiveinflation2)

Notes:1)Q42023.

2)InflationinQ42023comparedtoinflationinQ42019.Source:StatisticsKorea.

9.However,giventherelativelyhighlevelofeffectiveinflation,theextentofthecontractionofconsumptioninvulnerablepopulationsisunlikelytobesignificant.Firstandforemost,differencesineffectiveinflationamonghouseholdshavenotbeenrelativelylarge,aspriceshaverisenacrossallitemsofconsumptionexpendituresince2021.Inaddition,forthosehouseholds(lowincome,theelderly)thathaveexperiencedasubstantialincreaseineffectiveprices,theimpactofhighpricesappearstohavebeenoffsettosomeextentbyanotableincreaseinpublicincometransfers.Thenationalandbasicpensions,amongothers,whichareindexedtoinflation,seemtohavesomewhatsupportedtheconsumptioncapacityoftheelderly,whoarethemainbeneficiariesofpensionsduringthisperiodofinflation.

105

Increaseinrealconsumptioninthelow-incomegroup

duringthepandemic

Figure17.Incomeand

consumptionexpenditure1)2)

Highshareofpublictransfersincreasedpricehedging

capacity

Figure18.Compositionof

disposableincomeofthe

elderly3)4)

Substantialincreasein

incomefrompublictransfersfortheelderly

Figure19.Variationinpublic

incometransfers5)6)

Notes:1)DeflatingnominalvaluestorealvaluesusingCPI(2020).

2)Sumofcurrentincomes,suchasearnedincome,businessincome,andpropertyincome,andnon-currentincomes.

3)Basedon2023.4)Classificationoftheincomeofthoseaged70andoverintofivequintiles.

5)VariationbetweenQ42023andQ42019.

6)Publicincometransfersincludepublicpension,basicpension,socialbenefits,andsocialtransfersinkind.Source:StatisticsKorea.

105Nationalandbasicpensionpaymentsincreased3.6%thisyear,reflectinglastyear’sinflation.

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Ⅲ-2.PriceIncreases’ImpactdependingonHouseholdFinancialAssetsand

Liabilities

10.Regardingassets,priceincreasesreducetherealvalueofhouseholds’assets(liabilities)heldbyhouseholds,therebyrestricting(expanding)theircapacitytoconsume,withtheeffectvaryinggreatlydependingonthefinancialconditionsofhouseholds.

106

Thismeansthat,whilehouseholdswithalotoffinancialassets,suchasdeposits,sufferlossesduetopricerises,householdswithdebts,suchashomemortgageloans,benefitfromthedeclineintherealvalueoftheirliabilities.

11.Basedontheliterature,thenetnominalposition(NNP)ofhouseholds

107

wasmeasuredbytheirnetfinancialassets,anditwasfoundthatthoseagedunder35and65andoversuffersignificantlossesintheirassetsduetopriceincreases.Ontheotherhand,thoseagedbetween35and65benefitfrompriceincreases.Inaddition,households’NNPisgenerallydistributedbetweennetliabilities(ratioofNNPtoconsumption=-1)andnetassetscorrespondingtoannualconsumption(ratioofNNPtoconsumption=1)(Figure20).TheelderlytendtosufferlossesduetohighNNP,andthisisalsocommoninmajorcountries.

108

However,thehighNNPamongtheyoungandprime-agegroupsinKorea,whohavealotofdebts,isuncommon.Thisislargelyduetothefactthattheseagegroupsoftenholdnominalassetsintheformofrental(leasehold,jeonse)deposits(Figure21).

109

Theyounggroupandtheelderlysufferassetlossesincaseofpriceincreases

Figure20.Netfinancialassetsbyagegroup

(NNP,5-yearintervals)

Notes:1)Averageofhouseholdsfrom2019to2023.

2)NNP/Cisstandardizedwithhousehold

consumptionexpenditure(previousyear).

Sources:StatisticsKorea,BankofKoreaResearchDepartment.

Assets(jeonsedeposits)oftheyounggroupraisetheNNP

Figure21.NNPbyagegroup:decompositionof

assetsandliabilities

Note:1)Averageofhouseholdsfrom2019to2023.

Sources:SurveyofHouseholdFinancesandLivingConditions

ofStatisticsKorea,BankofKoreaResearchDepartment.

106Asaresult,wealthistransferredfromcreditorstodebtors,whichiscalledtheFishereffectorwealthchannel(theoppositehappenswhenpricesfall).Ifinflationpersists,capitalwillmovetorealassets,causingtherealassetpricestoriseandinflationtoincrease.

107Usingmicrodatafor2019to2023fromtheSurveyofHouseholdFinancesandLivingConditions,theNNPofhouseholdswasmeasuredusinghouseholds’netnominalassets(nominalassetssuchasdepositsandbondsminusnominalliabilitiessuchashomemortgageloans).Morebroadly,ashouseholdsholdstocksandsharesininvestmentintermediaries,theymaybeexposedtoindirectinvestmentassetsandthenominalpositionsofassetsandliabilitiesheldbyenterprises(DoepkeandSchneider2006,etc.).Thissectionanalyzesdirectpositionsthataredirectlyaffectedbyprices.Fordetailsonthedata,seeBox2.

108DoepkeandSchneider(2006),MehandTerajima(2011),andAdamandZhu(2015)reportedcasesintheUnitedStates,Canada,andtheeuroarea.

109Lee(2023)comparedtheNNPofhouseholdsinKoreaandtheUnitedStatesandassessedthehigherNNPofhouseholdsagedunder45associatedwithleaseholddepositsforhousingrentalasamajordifferencefromthoseintheUnitedStates.

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12.Asinterestrateshaveriseninresponsetohigherprices,theinflationeffectinrealassetvaluesshouldalsobeconsideredinadditiontotheeffectofthehigherinterestrates.

110

13.Lookingattheimpactofhighpricesandhighinterestratesonhouseholds’assetsandliabilities,theyounggroupisstronglyaffectedbyhighinterestrates,andamongthem,householdsrentingwithajeonsedepositareaffectedbybothhighpricesandhighinterestrates(Figure22).Thoseagedunder45whorentwithajeonsedepositareexposedtotheeffectsofadeclineintherealvalueoftheirassetsduetoinflationaswellastothenegativeeffectsofhigherinterestratesbecausetheyholdsomedebt.Ontheotherhand,thoseagedunder45whoareowner-occupiersbenefitfrompricerisesbutarehighlynegativelyaffectedbyhigherinterestratesastheyholdhighlevelsofdebt.Asfortheelderly(65andover),overall,theirlossesfrominflationduetothepositiveNNPisoffsetbytheirgainsfrominterestrateincreases.Somegroups(45to65,homeowners)benefitedmodestlyfrombothpricesandinterestratesbecausetheyholdbothhouseholddebt(pricegain)andnetliquidassets(interestrategain).

Theimpactofhigherinterestratesontheyounggrouparelarge,andtenantswithajeonsedepositarealsoaffectedbyhighprices

Figure22.Impactofincreasesinpricesandinterestrates:byhouseholdheadageandhousing

status

Notes:1)ThedotscorrespondtotheaverageNNPandinterestrateexposure(URE)foreachagegroup,ageofhousehold

headsdividedbyfive-yearinterval(averagefrom2019to2023),withtheblueindicatinghomeownersandorangerepresentingjeonserenters.

2)UREismeasuredusingthenetfinancialassetsofhouseholdswhosematurity/repricingfallswithinoneyear.For

details,refertoKeyIssuesoftheKoreaEconomicOutlookpublishedbytheBankofKoreainFebruary2024.

Source:OECD.

110Therealvalueofinterest-bearingfinancialassetsincreasesinlinewiththeriseinrealinterestrates.Therelationshipbetweennominalinterestrates,inflation,andrealinterestratesisasfollows.Fisherequation:r=i–τThatis,ifnominalinterestratesremainunchanged,theincreaseininflationleadstoadeclineinrealinterestrates.However,ifnominalinterestratesrise,realinterestratesriseandthegrowthrateoftherealvalueofinterest-bearingfinancialassetsisunaffected.

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14.Households’gainsandlossesfrompriceincreasescanaffecttheircurrentandfutureconsumption.

Forexample,householdswithahighNNP,suchasthoselivinginjeonsehousing,willlosealargeproportionofthevalueoftheiraccumulatedsavingsduetohighpricesfrom2021onwards,inevitablyreducingtheirlong-termconsumptioncapacity.Moreover,middle-agedandyounghouseholdswithconstrainedcashflowsduetoborrowing

111

orvulnerablehouseholdssuchastheelderlywhoarenotsufficientlypreparedforoldage

112

mayalsoseetheirconsumptionaffectedintheshortterm.

Ⅳ.QuantitativeAnalysisoftheImpactofInflationonConsumption

15.Thequantitativeanalysis,usingamacroeconomicmodel,showsthatthesharpriseinpricesfrom

2021onwardshassignificantlysloweddownprivateconsumption.Accordingtoanestimationmodelthatalsoreflectsthegeneralequilibriumeffect(BOKDSGEandIV-VAR),thegrowthrateofprivateconsumption(cumulative,comparedtoQ42020)declinedbyaround4%pin2021and2022duetothepriceincreaseshock(Figure23).Asaresult,themomentumofconsumptionrecovery,whichhadbeenrapidafterthepandemic,weakenedsignificantly(cumulativeprivateconsumptiongrowthratein2021and2022:9.4%).Theimpactofpriceincreaseswasverylargein2021and2022,andbegantodeclinegraduallyfrom

2023onwardswhiletheslowdownofconsumptionfrom2023islikelytobemainlytheresultofweakeningdemandfactors.

16.Inadditiontotheabove-mentionedpathwheretheconsumptionofallhouseholdssloweddown,theeffectofheterogeneityintheNNP(Fisherchannel)wasalsofoundtobesignificant.Inparticular,theslowdownofconsumptionduetotheFisherchannelisestimatedtohavebeenmorepronouncedamongtheyoungandelderlygroups,whichhaveahigherNNP.ThegrowthrateofconsumptionofhouseholdswithapositiveNNPfellacrossallagegroups,butmoresofortheyoung(under30)andelderly(60andover)groups(Figure24).

17.Summarizingtheresponsesofindividualhouseholds,itisestimatedthattheimpactofpriceincreasesthroughtheFisherchannelhassloweddowntheaggregateconsumptionofallhouseholds.

Thatis,thereducedconsumptionofthelosersfrominflationexceedstheincreasedconsumptionofthewinners.

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Specifically,theFisherchannelisestimatedtohavereducedthehouseholdconsumptiongrowthratebyaround0.9%pcumulativelyin2021and2022.Asinflationratehasstartedtofall,thisimpactisexpectedtograduallydiminish,particularlyin2023.

111Forhouseholdswithconstrainedcashflows,themarginalpropensitytoconsumeishighevenathighincomes.Fordetails,referto“KeyIssuesintheKoreaEconomicOutlook”oftheBankofKorea(February2024).

112About58.4%ofallretiredhouseholdsand59.8%ofretiredhouseholdsaged70andoversaidthattheirabilitytomeetthecostoflivinginthemostrecentyearisinsufficient(2023SurveyofHouseholdFinancesandLivingConditions,responsesof“insufficient”and“veryinsufficient”).

113SomestudiesintheUnitedStatesandothercountrieshaveshownthatinflationincreasesaggregateconsumptionthroughtheFisherchannel(Auclert2019,CrawleyandKuchler2022,etc.).Ontheotherhand,ithasbeenreportedthat,althoughtheinflationshockinKorealeadstoassetlossesforallhouseholdsthroughtheNNP,itsimpactonaggregateconsumptionisunclear,suggestingthattheFisherchanneloperatesdifferentlyinKoreathaninmajorcountries,includingtheUnitedStates(Lee2023).Inthissection,changeinconsumptionduetotheNNPisestimateddirectlyratherthanconsideringNNPgainsandlosse