Consumer spending enters deeper slump

Government to announce new plan to invest additional W2tr to revitalize domestic consumption


The nation’s domestic consumption is showing signs of further contraction as major retailers including department stores and giant marts recorded declining sales last month.

Sales at local department stores dropped for three consecutive months since June, decreasing by 6.1 percent in August from the previous month, the Ministry of Strategy and Finance said on Sunday. It is the first time the figure dropped for three months in a row.

Sales at local marts also fell last month by 3.5 percent on-month, a drop for the fifth consecutive month.

Credit card usage posted single-digit growth on-month for the first time since right after the Asian financial crisis in October 2009. It rose by 8 percent last month, compared to a 15.3 percent increase in May and 13.7 percent in both June and July.

Oil consumption decreased by 2.1 percent as well, marking a fall for two consecutive months, signaling that more commuters are walking or using public transportation. Only 86,072 cars were sold last month, which is also a drop of 24.9 percent.

Imports of consumption goods also decreased for six consecutive months since March. In August, the index dropped by 11.6 percent, the first two-digit fall and the biggest since Aug. 2009 when it dropped by 23.5 percent.

Imports of capital goods and raw materials are both also on a downward trend, decreasing in August by 18.2 percent and 7.8 percent, respectively.

Addressing concerns about worsening private spending as well as the unstable world economy, the government said it will announce on Monday plans to boost its financial investments by 2 trillion won to revitalite domestic consumption.

Meanwhile, the government is also examining ways to move up the regular macroeconomics finance meeting expected for next month between officials of the Finance Ministry, Financial Supervisory Service, Financial Services Commission and Bank of Korea, and hold it within the month to more swiftly cope with the issues.

By Park Min-young  (claire@heraldcorp.com)