“High-Income Class Sees Significant Increase in Consumption: Top 20% Record 57.8% Average Propensity to Consume”

As most of the physical (social) distancing measures were lifted, consumption by the high-income class in the top 20% (fifth percentile) of income increased significantly in the first quarter. Expenditures in the travel and lodging sector, such as the use of airplanes, ferries, and railways, and group travel expenses, increased markedly, and car purchases also increased.

According to the results of the household trend survey by the National Statistical Office on the 28th, the average propensity to consume in the fifth quintile recorded 57.8% in the first quarter. The average propensity to consume is the share of consumption expenditure in disposable income. It is an indicator that shows what percentage of the money households can actually spend.

The propensity to consume in this quintile is the highest in the first quarter since the outbreak of Corona 19 in 2020. The average propensity to consume in the 5th quintile was 55.0% in 2020, 56.5% in 2021, and 51.4% in 2022.

The average propensity to consume in the first quarter of this year in the 5th quintile is close to the level in the first quarter of 2019 (59.8%), right before Corona 19, which is read as a sign that consumption frozen by the corona is recovering to the previous level. These high-income households showed robust spending power even in the face of a 4.7 percent rise in consumer prices in the first quarter of last year. Excluding the impact of inflation, the rate of increase in real consumption expenditure in the first quarter of these classes was 12.4% compared to the same period last year, the highest since the Corona 19 crisis.

It was the highest among the 1st to 5th quintiles, nearly twice as high as the 6.4% average growth rate of real consumption expenditure for all households during the same period. The high-income class increased consumption in various fields such as car purchases, group tours, airlines, and entertainment and culture. During the first quarter, real spending in the transportation sector increased by 77.7%. Automobile purchases increased by 184.1%, other transportation such as aircraft and passenger ships by 119.4%, and rail transportation costs by 98.3%. In line with the lifting of distance, the demand for travel has increased significantly. In addition, spending on entertainment and culture increased by 27.6%, and group travel expenses soared by 713.5%.