It turned out that Korea's real consumption by households fell last year. Real consumption is the amount excluding consumer price increases from the cost of purchasing goods and services spent to run a household. This is the first decrease in real consumption in five years since 2020, during the COVID-19 period. It can be summed up as a year when wallets did not open as much as expected amid an economic slowdown.
◇ "Cut education, travel and alcohol spending"… household share for food reaches all-time high
According to the "Household income and expenditure survey results for the fourth quarter and annual 2025 (expenditure)" released by the Ministry of Data and Statistics (MODS) on the 26th, last year's average monthly consumption expenditure per household was 2,939,000 won. Nominal consumption expenditure rose 1.7% from a year earlier, but real consumption expenditure, excluding the inflation rate (2.1%), fell 0.4%. Real consumption expenditure decreased for the first time in five years since 2020 (-2.8%).
Households cut real consumption in all eight remaining categories except housing, water, electricity and other fuels; information and communications; food and lodging; and other goods and services. An official at the data ministry said, "In housing, water, electricity and other fuels, housing costs such as fuel and monthly rent increased significantly," adding, "Other goods and services saw the largest increase in expenditure among all categories, likely due to a sharp rise in expenses for funerals and weddings."
By contrast, the categories with the largest decreases in real consumption were education (-4.9%), household goods and services (-6.1%), and recreation and culture (-2.5%). A data ministry official said, "Expenditure on overseas travel, books, and alcoholic beverages (alcohol) was cut significantly," adding, "The decline in education expenses appears to be due to a decrease in households with children."
The share of food (food, nonalcoholic beverages, and dining out) in total expenditure was 30.4%, up 0.3 percentage point (p) from a year earlier. Since 2019, when a direct comparison of related statistics is possible, the share of households' food expenditure was at an "all-time high."
◇ "Chuseok effect" shows income and expenditure up in the fourth quarter last year… income distribution worsened
Although households' spending power declined for the year, looking only at the fourth quarter last year, both expenditure and income conditions improved compared with the first to third quarters. Average monthly income in the fourth quarter last year was 5,422,000 won, up 4% from a year earlier. Real income, reflecting inflation, increased 1.6%.
Earned income and transfer income rose 3.9% and 7.9%, respectively, driving overall income growth. A data ministry official said, "As the Chuseok holiday fell in the fourth quarter last year, year-end bonuses and allowances increased," adding, "There also appears to have been an effect from the payment of 'Mutual Payback.'"
Consumption expenditure in the fourth quarter last year averaged 3,008,000 won per month, up 3.6% from a year earlier. In real terms, it rose 1.2%. Disposable income, which excludes non-consumption expenditure such as taxes and the four major social insurance programs from total income, averaged 4,349,000 won per month. It increased 3.4% from a year earlier. The household balance, which is disposable income minus consumption expenditure, showed a surplus of 1,340,000 won.
However, only the first quintile, the lowest 20% by income among the first to fifth quintiles, ran a deficit, and the degree of deficit worsened. Basic livelihood security recipients and near-poverty households likely found it even harder to make ends meet. The quintile share ratio of equivalized disposable income, which analyzes the gap in disposable income between the first quintile and the top 20% fifth quintile households, was 5.59 times, up 0.31 percentage point (p) from a year earlier. That means income distribution worsened.