Last Year's Household Spending Down 2.3% 'Record' Decline... Entertainment, Culture, Education Down 22%

Average Monthly Consumer Spending -2.3%... Largest Decline Since Statistics Began
Entertainment & Culture -22.6%, Education -22.3
Statistics Korea "Decrease in Face-to-Face Service Consumption Due to COVID-19"
Low-Income Groups Concentrate on Housing and Health Expenses, High-Income Groups on Education Costs

Due to the prolonged COVID-19 pandemic, karaoke room closures have increased, resulting in various equipment and fixtures used in these establishments not being sold. The photo shows piled-up equipment at a used equipment trading shop for karaoke rooms in downtown Seoul on February 18. Photo by Moon Honam munonam@

[Sejong=Asia Economy Reporter Moon Chaeseok] Last year, the decrease in household consumption expenditure in South Korea was the largest since the statistics began to be compiled. The impact was significant due to the reduction of over 20% in face-to-face service consumption expenditures such as entertainment, culture, and education, caused by social distancing measures amid the COVID-19 pandemic.

According to the "2020 Annual Household Expenditure Survey Results" announced by Statistics Korea on the 8th, the average monthly consumption expenditure per household last year was 2.4 million KRW, a 2.3% (57,000 KRW) decrease from the previous year (2.457 million KRW). This was the largest decline since 2006, when statistics were compiled based on the current survey method that only investigates household accounts. Jung Guhyeon, head of the Household Income and Expenditure Trends Division at Statistics Korea, explained, "Although there was a -3% change in 2019 compared to the previous year, the 2018 data combined interview surveys and household accounts, so the survey methods were different. Excluding 2017 and 2018 data, last year's -2.3% is the largest decrease since the statistics began in 2006."

Looking at the breakdown of average monthly consumption expenditure per household, non-consumption expenditures such as condolence and congratulatory money, insurance premiums, and taxes amounted to 840,000 KRW; food and non-alcoholic beverages 381,000 KRW; food and accommodation 319,000 KRW; transportation 289,000 KRW; housing, water, and utilities 286,000 KRW; health 221,000 KRW; other goods and services 204,000 KRW; education 159,000 KRW; entertainment and culture 140,000 KRW; household goods and domestic services 127,000 KRW; communication 120,000 KRW; clothing and footwear 118,000 KRW; and alcoholic beverages and tobacco 38,000 KRW, in that order.

Compared to the previous year, consumption in face-to-face service sectors such as entertainment and culture (-22.6%), education (-22.3%), clothing and footwear (-14.5%), and food and accommodation (-7.7%) sharply declined. Jung explained, "The sharp decline in face-to-face service consumption expenditure is attributed to the strengthening of social distancing measures due to the COVID-19 pandemic." On the other hand, household goods and domestic services (9.9%) and health (9.0%) increased. Non-consumption expenditures decreased by 3.8%.

Structural issues such as income polarization and population aging, reflected in the large differences in consumption amounts and the proportions of education, housing, and health expenditures between the 1st quintile (lowest 20% income) and the 5th quintile (highest 20% income), remained evident. The average monthly consumption expenditure of the 5th quintile was 4.21 million KRW, 3.98 times higher than the 1st quintile's 1.058 million KRW. The 5th quintile invested 9.6% (403,000 KRW) of their total consumption in education, while the 1st quintile spent only 1.6% (16,000 KRW). Conversely, the 1st quintile allocated 33.4% (354,000 KRW) to housing and health, whereas the 5th quintile spent 16.5% (693,000 KRW) in these categories.

In particular, the large gap in education consumption by income is due to the population structure where the average age of household heads in the 1st quintile (62.3 years) is higher than that of the 5th quintile (50.2 years). Since the proportion of elderly population is higher among lower-income groups, the possibility of expanding education investment among low-income households is unlikely in the near term. For the same reason, the phenomenon of the 1st quintile having a higher proportion of health consumption than the 5th quintile is also expected to be difficult to improve in the short term.

This content was produced with the assistance of AI translation services.