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The percentage of income spent on real consumption by the top 20% high-income individuals in the fourth quarter of last year reached its lowest level in four years. As per the “2025 Fourth Quarter Household Trends Survey” published by the Ministry of Data and Statistics on the 1st, the average propensity to consume (APC) for households in the top 20% income bracket during the fourth quarter of last year was 54.6%, a decrease of 0.4 percentage points compared to the same period in the previous year. This represents the lowest value in four years since the fourth quarter of 2021 (52.6%).

The APC represents the percentage of disposable income that is used for spending. Disposable income is what’s left after deducting non-consumption expenses, like taxes and interest, from total income, and it can be utilized for either consumption or saving.

The average consumption proportion (APC) for the highest quintile of households was 55.6% in the fourth quarter of 2019, following revised data, then dropped to 52.6% in 2021 and increased to 57.8% in 2023. Nevertheless, it has decreased for two straight years from 2024 up to last year.

This indicates that even with higher income, consumption did not increase at the same rate. The top quintile households had an average monthly nominal disposable income of 9,361,000 South Korean won last year, which rose by 5%, the highest growth rate among all income groups. This was mainly due to an 8.7% rise in earnings from work—the biggest increase since the data revision in 2019—because of things like bonuses from major companies. However, nominal spending (5,110,000 South Korean won) only went up by 4.3%.

With high-income earners keeping almost half of their disposable income, their nominal surplus (4,250,000 Korean won) rose by 5.9%. This surplus, determined by subtracting spending from disposable income, is commonly known as the funds available for savings or investments. The surplus for the top quintile households has grown for two years in a row, staying over 4 million Korean won for two consecutive years.

Some have proposed that individuals with high incomes, who already possess adequate purchasing power, might have directed their additional earnings into property or equity investments instead of increasing their spending.

In its report titled “Impact of Sectoral Growth Differentiation on Prices,” published on the 27th of last month, the Bank of Korea found that the marginal propensity to consume (MPC) of high-income individuals (4th–5th quintiles) dropped from 0.11 during 2020–2021 to 0.07 in 2022–2023. The MPC indicates the percentage of extra income that is spent on consumption. Although the MPC of high-income individuals was already relatively low when compared to other income groups, it has continued to decrease in recent years.

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