In the fourth quarter of last year, household consumption expenditure increased by only 2.5% compared to a year earlier. This is the smallest increase in 15 quarters since the first quarter of 2021. This is attributed to the impact of the economic downturn, which led households to refrain from spending on durable goods such as automobiles.
The National Statistical Office announced on the 27th the results of the '2024 fourth quarter and annual household trend survey.' The household trend survey is akin to a 'household account book' that records overall income and expenditure.
◇ In the last fourth quarter, households earned an average of 5.22 million won per month and spent 3.91 million won.
The average monthly income per household in the fourth quarter of last year was found to be 5,215,000 won, an increase of 3.8% compared to the same quarter of the previous year. Earned income (3,241,000 won, 2.3%), business income (1,091,000 won, 5.5%), and transfer income (709,000 won, 5.6%) all increased. When accounting for inflation, real income rose by 2.2%, marking consecutive increases in the second, third, and fourth quarters of last year.
The average monthly household expenditure was 3,910,000 won, an increase of 2.5%. Both consumption expenditure and non-consumption expenditure, which make up household expenditure, increased. Among these, consumption expenditure was 2,903,000 won, which increased by 2.5% compared to the previous year. The increase in consumption expenditure is the smallest since the first quarter of 2021 (1.6%), occurring after 15 quarters (3 years and 9 months).
Looking at the consumption expenditure items, expenditures related to housing, water, and heating increased by 7.6%. There were also significant increases in food and lodging (5.1%) due to high food prices, as well as entertainment and culture related to overseas travel (11.1%).
However, expenditures on transportation decreased by 9.6%, which was cited as a factor that dampened the overall increase in consumption expenditure. A National Statistical Office official noted, 'This seems to be due to reduced spending on durable goods such as automobiles.' Durable goods refer to items like cars, furniture, and communication devices that are expensive and can be used for a long time, which are sensitive to the repercussions of an economic downturn. Expenditures on alcoholic beverages and tobacco (-3.4%), household goods and services (-3.7%), and communication services (-2.4%) also declined.
◇ Increase in 'deficit households'... deficit deepened among the lowest income quintile.
The average disposable income per month, after deducting non-consumption expenditures such as pensions, insurance, and interest from income, was found to be 4,207,000 won, an increase of 4% compared to a year ago. After deducting consumption expenditure from this disposable income, the 'household balance' showed a surplus of 1,305,000 won, reflecting an increase of 7.8% from the previous year. However, the ratio of consumption expenditure to disposable income, termed 'average consumption propensity,' decreased by 1.1 percentage points to 69% compared to last year.
When observing income levels divided into quintiles 1 through 5, all quintiles experienced income increases, while expenditures rose in all but the highest quintile (5th, -0.4%). The lowest income quintile (1st) saw an increase in total income, but earned income decreased by 4.3%, making it the only quintile to experience a decline. This was influenced by the majority of the 1st quintile being composed of older adults. However, the overall income was supported by a significant increase in transfer income due to enhanced guarantees such as the basic pension and livelihood benefits.
The proportion of households with a 'deficit' in household balance was 23.9%. This means that one in four households spent more than they had available. The ratio of deficit households slightly increased from the previous quarter (23.7%). The deficit household ratio in the lowest income quintile rose sharply from 54.8% to 56.9%, while increases were also seen in the 3rd quintile (19.7% to 20%) and 5th quintile (7.1% to 8.2%). The proportions decreased in the 2nd quintile (22% to 21.1%) and 4th quintile (15.2% to 13.3%).
◇ In the previous year, high food expenditures were attributed to 'prices,' while spending on alcohol and tobacco was reduced.
Meanwhile, the average monthly consumption expenditure for the year was 2,890,000 won, an increase of 3.5% compared to the previous year. This growth rate is lower than the expenditure growth rate for 2023 (5.8%). The real growth rate of consumption expenditure, adjusted for inflation, is 1.2%.
Expenditures increased in food and lodging (5.2%), housing, water, and heating (6.5%), entertainment and culture (7.9%), and food and non-alcoholic beverages (3.8%). However, when factoring out the inflation effects, the increase rates for food and lodging and food and non-alcoholic beverages were just 2% and 0%, respectively. While the quantity of food purchased remained the same as last year, rising prices led to higher spending. The categories that saw the largest declines in real consumption expenditures, adjusted for inflation, were alcoholic beverages and tobacco (-3.0%) and transportation (-2.9%).