Kim Yo Jong, a sister to Kim Jung Un described South Korean President Yoon Suk-yeol as “really simple and still childish”.
“No one barters its destiny for corn cake,” she added in a statement released by state news agency KCNA.
South Korea’s unification minister, Kwon Young-se, described her comments as “disrespectful and indecent”.
It is the first time that a senior North Korean official has commented directly on what Mr Yoon has called an “audacious” plan.
President Yoon suk-yeol said he is willing to provide phased economic aid to North Korea if it ends nuclear weapons development and begins denuclearisation.
But Ms Kim was scathing in her denouncement of the idea, saying of Mr Yoon: “It would have been more favourable for his image to shut his mouth, rather than talking nonsense as he had nothing better to say.”
Speaking to a large audience in Pyongyang on 10 August, she said: “What matters is the fact that the South Korean puppets are still thrusting leaflets and dirty objects into our territory.
“The main culprit who gravely violated our people’s safety inflicted pains and caused anxiety to millions of parents in our country, who had to endure all the hardships to protect the lives of their precious children, were the despicable South Koreans.”
She added: “We have cleared out the virus spread by the South Korean scum. We must counter it toughly. We have already considered various counteraction plans but our countermeasure must be a deadly retaliatory one.”
The south’s offer of economic aid was first proposed in May – and Mr Yoon talked about it again on Wednesday as he marked 100 days in office.
He has also pushed to increase his country’s military deterrence against North Korea, and Seoul has resumed long-suspended joint drills with the United States, which is likely to anger North Korea.
North Korea is unlikely to give up its nuclear weapons no matter what because nuclear weapons are the only deterrence means against more powerful countries like US and Japan.