Overview:
Steady Incomes, Rising Costs: What the 2023–24 HIES Reveals About Life in Palau
Palau’s newly released Household Income and Expenditure Survey (HIES) offers a comprehensive snapshot of the nation’s economic landscape. The data shows that while household incomes have kept pace with expenditures, families are increasingly affected by the high cost of imported goods, housing, and energy. Explore the key findings that reflect the realities of living in Palau today.
By: L.N. Reklai
Koror, Palau (October 2025) — Palau’s households are earning steady incomes but continue to face mounting cost-of-living pressures driven by high import dependency, housing costs, and energy prices, according to the 2023–2024 Palau Household Income and Expenditure Survey (HIES).
The report, conducted by the Bureau of Budget and Planning with support from development partners, offers a comprehensive snapshot of the nation’s population, income, and spending trends. Covering 6,915 households nationwide, the survey reflects how Palau’s economic realities shape daily life for its 17,861 residents.
“The HIES results highlight both economic stability and vulnerability,” the report noted, emphasizing that household incomes are keeping pace with spending but that families remain exposed to external price shocks.
Population and Household Profile
The survey found that about 80% of Palau’s population resides in urban areas—mainly Koror and Airai—underscoring continued urban concentration. The average household size stands at 2.6 people, smaller than in previous decades, with private homes averaging 3.3 people compared to 1.2 in barracks housing.
Palau’s population is relatively mature, with a median age of 39 years and a dependency ratio of 43%, meaning there are 43 dependents for every 100 working-age adults. The survey also revealed a gender imbalance of 119 males for every 100 females, largely due to the presence of male-dominated migrant labor sectors.
Income and Inequality
Nationally, total household income reached about $230.2 million annually, translating to an average household income of $33,289 and a per capita income of $12,888. Incomes were slightly higher in rural areas ($34,013) than in urban ones ($33,105), while employment accounted for 64% of total household income.
Other key income sources included imputed rent from owner-occupied housing (14%), pensions and aid transfers (13%), gifts and remittances (6%), and property income (2%).
The report measured income inequality through a Gini coefficient of 0.34, signaling moderate inequality comparable to other Pacific island economies. Expenditure inequality was slightly lower, at 0.29, indicating a relatively even pattern of household spending across income groups.
Expenditures and Cost Drivers
Total annual household expenditure was reported at $227.1 million, averaging $32,834 per household. The biggest cost driver was food and non-alcoholic beverages, which accounted for 35% of household consumption—reflecting Palau’s heavy reliance on imported goods.
Housing, water, electricity, and gas followed closely, making up between 24% and 26% of all household spending, inflated by urban rents and utility prices. Restaurants and hotels contributed about 11%, while transport and communication together made up just over 10%.
Donations and community transfers, including church contributions, represented roughly 8% of all expenditures, highlighting the importance of social obligations within Palauan culture.
Economic Realities Behind the Numbers
The report identifies several structural pressures shaping Palau’s living costs: dependence on imported food and fuel, limited local agricultural production, and the high cost of housing and utilities. Energy prices, in particular, continue to weigh on household budgets, especially in rural and outer-state communities.
Transportation costs were also cited as a key vulnerability, with most households relying on private vehicles and imported fuel. Global price fluctuations can quickly translate into local economic strain.
Despite these challenges, the data suggests Palau’s households remain largely cash-based and maintain spending levels comparable to their earnings, reflecting relative income stability. However, the report cautions that this balance is fragile, as any external price increase or supply disruption could quickly tip household budgets into deficit.
Regional Context
Palau’s household spending patterns mirror those seen across Pacific island economies, where high import reliance and small market size contribute to elevated living costs. The HIES findings are expected to inform government policies on wage structures, social protection, and food and energy security.
Overall, the 2023–2024 HIES portrays an economy marked by steady income flows but persistent vulnerability to global market dynamics—a dual reality familiar to small island nations striving for resilience amid global uncertainty.