While the average income of households has increased, the income of vulnerable households has decreased. Following the declaration of martial law at the end of last year, household financial surpluses (income-expenditure) have increased by more than 10% because the level of income increase has not outpaced the level of spending. However, this was not the case for first-quintile households, the lowest income bracket. As their income decreased, expenditures increased due to inflation, resulting in a more than 20% increase in household financial deficits. There are assessments that the quality of life for vulnerable groups has worsened.
According to the '2025 first-quarter household trends' report released by Statistics Korea on the 29th, the average monthly income per household was 5,351,000 won, a 4.5% increase from the same quarter last year. Earned income increased by 3.7% to 3,412,000 won. Business income increased by 3% to 902,000 won, and transfer income rose by 7.5% to 879,000 won. Real income, adjusted for inflation, showed an increase of 2.3%.
The average household expenditure was 4,072,000 won, a 2.2% increase from the same period last year. Consumption expenditure rose by 1.4% to 2,950,000 won, and non-consumption expenditure increased by 4.4% to 1,123,000 won.
The average household disposable income was 4,228,000 won, a 4.5% increase from the same period last year. The household financial surplus increased by 12.3% to 1,279,000 won. The average propensity to consume, which is the ratio of consumption expenditure to disposable income, decreased by 2.1 percentage points to 69.8% compared to the same period last year.
Analyzing by income quintile, households in the second to fifth quintiles all saw income increases, except for the first quintile. The second quintile increased by 1.9%, the third by 2.9%, the fourth by 5.8%, and the fifth by 5.6%. Conversely, the first quintile experienced a 1.5% decrease. While income growth rates exceeded 5% in the fourth and fifth quintiles, the first quintile saw a decrease in income and the second quintile experienced an increase of less than 2%, indicating a worsening wealth gap. The income quintile ratio rose to 6.32, an increase of 0.34 from the same period last year.
The income of the first quintile was 1,140,000 won, a 1.5% decrease from the same period last year. Current income decreased by 1.9%, with business income and property income declining by 7.7% and 29.3%, respectively. Lee Ji-eun, Director of the Statistics Korea's Household Income and Expenditure Trends Division, noted, "The composition of households by quintile has changed significantly," adding, "The decrease in self-employed proportion in the first quintile seems to have led to a decline in business income."
Although the first quintile's income decreased, expenditure rose by 4.2% to 1,578,000 won compared to the same period last year. This increase in expenditure is attributed to inflation pressure.
For the first quintile, the household surplus stood at -438,000 won. This implies that expenditure exceeded income, leading to a deficit. The surplus rate dropped by 10.2 percentage points to -47.6% compared to the same period last year.
Meanwhile, the average income of households in the fifth quintile was 11,884,000 won, a 5.6% increase from the same period last year. Household expenditure increased by 2.8% to 7,908,000 won. Disposable income rose by 5.9% to 9,180,000 won, and the household financial surplus increased by 11.4% to 3,976,000 won compared to the same period last year. The surplus rate climbed by 2.1 percentage points to 43.3%.
Expenditure on consumption increased in areas such as housing, water, and utilities (5.8%) and food and non-alcoholic beverages (2.6%), but decreased in transportation (-3.7%) and clothing and footwear (-4.7%).
Real consumption expenditure, adjusted for inflation, decreased by 0.7%. This marks a reversal in trend for the first time in seven quarters since the second quarter of 2023, which saw a decline of 0.5%.
The real consumption expenditure of households increased by more than 1% in both the second and third quarters of last year, but the increase rate fell below 1% in the fourth quarter of last year (0.9%) and turned negative this year.
When looking at household consumption expenditure by income quintile, low-income households showed a larger increase in consumption expenditure despite a decrease in income.
For the first quintile, which comprises households with income levels below the bottom 20%, expenditure increased by 3.6% with significant increases in categories such as alcoholic beverages and tobacco (10.8%), education (28.2%), and food and lodging (8.0%).
Households in the fifth quintile, or those with income levels above the top 20%, saw their consumption expenditure increase by 2.1%. Although there was an increase in spending on recreational and cultural activities (11.5%) and health (11.2%), there was a decrease in transportation and communication (-7.6%) and clothing and footwear (-3.3%).
Director Lee Ji-eun noted, "While income has decreased for the first quintile households, necessary expenditures continued, leading to an increase in consumption expenditure, whereas in the fifth quintile, there has been a reduction in durable and semi-durable goods consumption, such as automobile purchases."