The result of a survey conducted by the Korea Federation of Enterprises (KFE) on the “2025 National Consumer Expenditure Plan” suggests that more than half of the nation’s population plans to reduce their consumer spending next year compared to this year. High inflation and exchange rates are cited as the main reasons. The decline in consumer sentiment is expected to significantly impact industries related to outdoor activities such as travel and dining.
The KFE, through the polling agency Mono Research, surveyed 1,000 people aged 18 and over nationwide from November 13 to 20. It revealed that 53.0% of respondents plan to cut back on spending next year. Household consumer spending is expected to decrease by an average of 1.6% compared to this year.
When considering income levels, the lower 60% of income groups (1st to 3rd quintiles) indicated plans to reduce spending next year. Particularly, the lowest 20% (1st quintile) expect a reduction of 6.3% compared to this year. In contrast, the top 40% (4th to 5th quintiles) plan to increase spending, indicating anticipated income-based consumption polarization.
The KFE explained that lower-income groups are more sensitive to the impacts of high inflation and economic downturns, resulting in a trend where the decrease in consumer spending is inversely proportional to income level.
The main reason cited for reduced spending next year is ongoing high inflation (44.0%). This is followed by concerns about income reduction or job loss (15.5%), and increased tax and utility burdens (8.5%).
Items expected to see the most decrease in spending are travel, dining, and accommodation (17.6%), followed by leisure and cultural activities (15.2%), and clothing and footwear (14.9%), indicating a reduction focused on outdoor activities.
Conversely, spending on essentials such as food and beverages (23.1%), housing costs (rent, utilities – 18.0%), and daily necessities (toiletries, detergents – 11.5%) is expected to rise, regardless of economic conditions.
The KFE forecasts that amid concerns over a downward-adjusted growth rate for next year, consumers are likely to be hesitant to spend on anything beyond essential expenditures.
Respondents identified risks that may impact next year’s consumer activities as ongoing high exchange rates and inflation (43.2%), increased tax and utility burdens (16.4%), and a contracted asset market (12.7%).
For policy tasks to improve the consumption environment, respondents pointed to stabilizing prices and exchange rates (42.1%), easing tax and utility burdens (20.1%), and interest rate adjustments (11.3%).
As for when consumer spending is likely to pick up, 35.1% of respondents answered “no timeline,” with 75.6% expecting it to be at least after 2026 (24.6% in 2026 and 16.0% post-2027).
Only 24.3% responded that spending has “already improved” (2.5%) or would in 2025 (5.8% in the first half and 16.0% in the second half).
Four out of ten people expect household conditions to worsen next year compared to this year, forecasting a decline in consumer sentiment.
Responses expecting household conditions to deteriorate were at 42.2% (33.0% worsen, 9.2% significantly worsen). In contrast, only 12.2% (10.7% improve, 1.5% significantly improve) expected improvement, less than a third of the worsening responses. Those expecting conditions to be similar to this year were 45.6%. Reporter Kim Hyun-il.