Korean household spending dips to record low in 2015

Korea's household spending fell to an all-time low in 2015 despite a slight increase in income, as households repaid debts and spent less amid an economic slump, a government report showed Friday.

The average consumption propensity, or the ratio of total consumption spending to disposable income, came to 71.9 percent, down 1 percentage point from a year earlier, according to a report from Statistics Korea.

Shoppers at a department store in Seoul (Yonhap)

It is the lowest reading ever since the statistics office began compiling such data in 2003.

The average monthly consumption spending of households came to 2.56 million won ($2,070.5) last month, up 0.5 percent from a year earlier, the report said.

The amount, however, marks a 0.2 percent on-year drop in real or inflation-adjusted terms, it added.

Korea has been struggling to revive local spending as consumer sentiments quickly froze following the outbreak of Middle East Respiratory Syndrome in late May. The outbreak was officially declared over late last year, but only after claiming 38 lives and putting a serious dent in consumer spending here.

Household non-consumption spending gained 0.7 percent on-year to 810,000 won per month in 2015. The increase was largely attributed to a rise in tax and insurance payments.

With households spending less, their average income surplus surged 5.6 percent on-year to 1 million won per month as their average monthly income grew at a steady pace of 1.6 percent to some 4.37 million won, according to the report.

For the fourth quarter alone, average household income grew 0.9 percent on-year to about 4.3 million won.

In the October-December period, average household consumption propensity rose 0.7 percentage points to 72.3 percent as their average consumption spending climbed 1.7 percent to 2.55 million won, outpacing a 0.7 percent gain in disposable income to some 3.52 million won, the report showed.

Data from the Bank of Korea shows that the country's household credit climbed to a new high in the fourth quarter of 2015, adding to concerns over fast-growing household debts.

Household credit reached 1,207.0 trillion won as of end-December, breaching the 1,200 trillion won mark for the first time in the country's history, the data showed. (Yonhap)