High-income households in South Korea spent the smallest share of their earnings on consumption in four years during the fourth quarter of 2024, as income gains outpaced spending growth and savings swelled.
The top 20% of earners by income recorded an average propensity to consume of 54.6% in the fourth quarter, down 0.4 percentage points from a year earlier, according to the Household Trends Survey released by the National Data Agency and data from the Korea Statistical Information Service (KOSIS) on Monday. That marks the lowest fourth-quarter reading since 2021, when it stood at 52.6%.
Average propensity to consume measures the share of disposable income spent on consumption. Disposable income refers to total earnings minus non-consumption expenditures such as taxes and interest payments—money households can freely spend or save.
The consumption ratio for top-quintile households has declined for two consecutive years. In the fourth quarter of 2023, it plunged 2.8 percentage points year-on-year as income rose 3.7% while consumption spending fell 0.3%.
A similar pattern emerged last year. Monthly nominal disposable income for top-quintile households averaged 9.361 million won ($6,500), up 5.0% from the previous year—the highest growth rate among all income brackets. Labor income surged 8.7%, the largest increase since statistics were revised in 2019, driven partly by bonus payments at large corporations. Nominal income rose 6.1% as a result.
Consumption growth, however, remained relatively subdued. Monthly nominal consumption spending for these households averaged 5.11 million won, up 4.3%—higher than the 3.6% increase for all households but below the pace of income growth.
Consequently, surplus funds expanded. The nominal surplus—disposable income minus consumption spending—rose 5.9% to 4.25 million won. This surplus, available for savings or investment, has increased for two straight years among top-quintile households.
Analysts attribute the trend to one-time or temporary income gains that did not translate into immediate spending increases. The weakening link between income growth and consumption among high earners was also evident.