The proportion of deficit households in the first income quintile is approaching 60%, and interest costs have reached a record high for the fourth quarter. Last year, in the fourth quarter, one in four households spent more than their disposable income, marking the highest percentage of deficit households in six years. According to the National Statistics Portal (KOSIS) and household trend surveys, the deficit household ratio was 25.0% last year. Deficit households are those with consumer spending exceeding disposable income.
The deficit household ratio, last seen at such high levels in 2019 at 26.2%, has risen again after dipping to 23.3% in 2020 and hovering in the 24% range from 2021 to 2023. The rate slightly decreased to 23.9% in 2024 but increased by 1.1 percentage points last year. This trend is attributed to persistent high inflation worsening household budget conditions, with spending outpacing income growth.
Despite a stock market boom, deficit households might not have benefited due to a lack of investment capacity. However, the ratio can be influenced by temporary durable goods consumption, as highlighted by a Data Office official. The fourth quarter coincides with the Chuseok holiday, potentially increasing related expenses.
Typically, lower-income brackets see higher deficit household ratios due to the larger proportion of spending relative to income. The deficit household ratio for the lowest 20% income bracket (the first quintile) was 58.7%, nearly reaching 60%, with a 1.8 percentage-point increase from the previous year. The second quintile also saw an increase to 22.4%, a 1.3 percentage-point rise. The third quintile increased by 0.1 percentage points to 20.1%, while the fourth increased by 2.9 percentage points to 16.2%. Only the top 20% income bracket (the fifth quintile) saw a decrease to 7.3%, down by 0.9 percentage points.
Increased interest burdens are also restricting household spending capacity. With accumulated household loan balances, interest burden has reached an all-time high. Last year, the average monthly interest cost among non-consumer expenditures was 134,000 won per household, up 13,000 won (11.0%) from the previous year, marking the highest level since the establishment of quarterly statistics in 2019. In the first quintile, the average monthly interest cost exceeded 30,000 won for the first time, increasing by 2,400 won (8.5%) from the previous year. Concerns are raised that these interest burdens can weigh more heavily on households with lower incomes.