One in Four Korean Households Spent Beyond Income in Q4

One in four Korean households ran a deficit in the fourth quarter of last year, data showed, as cumulative high interest rates and inflation pushed spending above income for a growing number of families.

The proportion of deficit households—those whose consumption expenditure exceeded disposable income—reached 25.0% in Q4 2024, according to data released Monday by the National Statistical Office's Korean Statistical Information Service (KOSIS) and its Household Trend Survey.

This marked the highest Q4 reading since 2019's 26.2%, representing a six-year peak. The ratio had fallen to 23.3% in 2020, hovered around 24% from 2021 to 2023, and dropped to 23.9% in 2024 before jumping 1.1 percentage points last year.

Analysts attribute the deterioration in household finances to accumulated high interest rates and inflation. Despite the recent stock market boom, deficit households likely lacked the investment capacity to benefit from rising asset values.

"The deficit household ratio can be influenced by temporary durable goods consumption," the data agency said. "The Q4 figure may also reflect increased spending during the Chuseok holiday period."

Lower-income groups showed higher deficit rates due to their larger spending-to-income ratios. Among the bottom 20% income bracket, 58.7% of households ran deficits—up 1.8 percentage points year-on-year and approaching 60% for the second consecutive year of increases.

The second quintile rose 1.3 percentage points to 22.4%, while the third quintile edged up 0.1 percentage point to 20.1%. The fourth quintile jumped 2.9 percentage points to 16.2%. Only the top 20% income bracket saw improvement, falling 0.9 percentage point to 7.3%.

Monthly interest payments hit record highs as household loan balances accumulated. Average monthly interest costs per household reached 134,000 won ($95) in Q4—up 13,000 won or 11.0% year-on-year—the highest Q4 figure since quarterly data collection began in 2019.

For the lowest income quintile, monthly interest costs exceeded 30,000 won for the first time, reaching 30,200 won—a 2,400 won or 8.5% increase from the previous year.