The proportion of consumption expenditure relative to income, known as the average propensity to consume, has declined across all age groups in South Korea compared to a decade ago.
The Korea Chamber of Commerce and Industry (KCCI) published a report titled ‘Changes in Consumption Propensity by Generation and Implications’ on the 1st, analyzing income, spending, and consumption trends by age group based on Statistics Korea’s Household Income and Expenditure Survey data from 2014 and 2024.
The analysis found that while income increased in all age groups except those under 30, consumption expenditure did not rise proportionally.
The average propensity to consume—the share of household disposable income spent on consumption—fell from 73.6% in 2014 to 70.3% in 2024, a 3.3 percentage point drop.
By age group, those in their 60s saw the sharpest decline, with their average consumption propensity dropping from 69.3% to 62.4%.
Similarly, all other age groups recorded lower figures than a decade ago: under 30 (73.7% → 71.6%), 40s (76.5% → 76.2%), 50s (70.3% → 68.3%), and 70s (79.3% → 76.3%).
Notably, those in their 20s and 30s saw declines in both monthly average disposable income ($2,517 → $2,507) and spending ($1,795 → $1,856).
Shin Dong-han, a research fellow at the Korea Industrial Research Institute, explained, “The share of disposable income allocated to consumption—after excluding non-consumption expenditures like housing interest and taxes—has decreased.”
He added, “While aging and income issues are major reasons for reduced spending across generations, a ‘shift in habits toward spending less’ also appears to be a significant factor.”
Consumption patterns have also shifted. Over the past decade, spending increased in categories such as healthcare (7.2% → 9.8%), recreation/culture (5.4% → 7.8%), food (dining out)/accommodation (13.7% → 14.4%), and housing/utilities (11.5% → 12.2%).
The KCCI attributed this to rising medical demand due to aging, expanded leisure/hobby spending, and the normalization of value-driven consumption like dining out and travel.
In contrast, spending on traditional necessities like groceries/beverages (15.9% → 13.6%), clothing/footwear (6.4% → 4.8%), and education (8.8% → 7.9%) declined.
This is seen as a combined effect of rising single-person households, the popularity of home meal replacements, efficient online purchasing, the growth of secondhand/sharing economies, and fewer students.
By age group, younger generations spent more on food/accommodation and housing/utilities, while older age groups allocated more to healthcare.
Jang Geun-moo, head of the KCCI’s Distribution & Logistics Promotion Institute, said, “Weak consumption isn’t just due to an economic slump but reflects broader societal changes in demographics, income, and psychology. Short-term stimulus measures have limits.” He stressed the need for “tailored policies considering generational traits to restore sustainable growth momentum.”
