Seoul – South Korea’s middle class is feeling the pinch, with disposable household income falling below 700,000 won for the first time in five years. According to the Korea National Statistical Office (KOSIS), the surplus income of households in the top 40-60% income bracket, generally considered the middle class, dropped to 658,000 won in the fourth quarter of last year. This represents a significant decline of 88,000 won compared to the same period the previous year.

The primary culprits behind this financial strain are soaring real estate-related expenses and escalating education costs. The burden of acquisition and registration taxes, coupled with rising interest rates on property purchases, is squeezing middle-class budgets. Additionally, education expenditures have seen a sharp increase, far outpacing the average household’s spending growth in this category.

This financial pressure is taking a toll on consumer sentiment, leading to a noticeable contraction in spending among middle-income earners. A recent report by the Korea Chamber of Commerce and Industry highlights the decline in real consumption since 2020, attributing it to the rising burden of household debt and interest payments.

Experts warn that this trend could have broader implications for the South Korean economy, as the middle class plays a crucial role in driving domestic consumption. As financial pressures mount, there are concerns that consumer spending will continue to decline, potentially hindering economic growth.