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| Gimpo International Airport's domestic terminal is crowded with travelers, Friday. Yonhap |
By Lee Yeon-woo
The top 20 percent of income earners in Korea have been opening up their wallets in the first quarter, especially since the government has lifted nearly all quarantine measures. This wealthy group is driving domestic consumption, showing a surge in outdoor activities and travel.
According to Statistics Korea, Sunday, the propensity to consume by the top 20 percent of income earners stood at 57.8 percent during the first quarter of this year.
The propensity to consume refers to the proportion of one's income that is spent on goods and services, rather than being put into savings.
The propensity to consume among the top 20 percent of income earners in the first quarter reached its highest since the COVID-19 pandemic began in 2020. It stood at 55 percent in 2020, increased to 56.5 percent in 2021 and dipped to 51.4 percent in 2022.
Even though the current figure is still lower compared to the first quarter of 2019, when it stood at 59.8 percent, the top 20 percent of income earners are considered the group closest to pre-pandemic consumption levels.
The average propensity to consume for all households during this year's first quarter was 70.7 percent.
Amid a 4.7 percent rise in consumer prices during the first quarter, high-income earners demonstrated their strong purchasing power.
The rate of real consumption expenditure for this income group increased by 12.4 percent during the first quarter, when excluding the effects of inflation. Among all income groups, this is the highest since before the pandemic.
In particular, real consumer spending on transportation surged by 77.7 percent, following the lifting of quarantine measures. Vehicle purchases skyrocketed, increasing by a whopping 184.1 percent, while transportation spending, including air travel and passenger ships, rose by 119.4 percent. Rail travel spending also saw a significant jump of 98.3 percent.
Consumption in the entertainment and culture sector climbed by 27.6 percent. Specifically, group travel expenses saw a staggering increase of 713.5 percent. Spending on food and accommodation rose modestly, up by 10.7 percent.
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