While spending on food and clothing has fallen, a consumption structure in which only cars sell well is hardening. Analysts say the car-led rebound coupled with weaker everyday consumption has made a "K-shaped polarization" more pronounced in the consumer market.
According to the Korean Statistical Information Service (KOSIS), last year's retail sales index (constant) rose 0.5% from a year earlier. Passenger car sales increased 11.0% as policy factors such as electric vehicle subsidies kicked in, driving a rebound in the overall indicator. The growth rate of passenger car sales was the highest since 2020.
By contrast, the retail sales index excluding passenger cars fell 0.7%. It has declined for four consecutive years since 2022, marking the longest downturn since related statistics began in 2010. Non-auto consumption, which had briefly recovered right after COVID-19, has weakened again, entering a phase of structural slump.
By type of consumption, the polarization is even clearer. Sales of durable goods, including passenger cars, increased 4.5% last year, but sales of semi-durable goods such as clothing, shoes, and bags fell 2.2%. Semi-durable consumption declined for the third straight year, the longest drop since statistics began in 1995. Consumption of nondurable goods, including food and beverages, fuel, and cosmetics, also fell 0.3%, decreasing for the third straight year. In effect, the trend of cutting expenditure across essential consumption areas continued.
However, the degree of consumption weakness narrowed as the year progressed into the second half. Nondurable consumption turned to growth in the fourth quarter, and semi-durables also appeared to be bottoming out, with quarterly ups and downs. Output in the accommodation and food service sector recovered in the second half after a sluggish first half.
The government says the recovery trend in the economy is continuing, citing factors such as a rise in the consumer sentiment index.