South Korea's savings rate hit a 17-year high in the first quarter of this year, weakening consumption that has been cited for sluggish economic growth, official data showed Tuesday.

The national savings rate, which subtracts all consumption costs and expenditures from the gross national disposable income, stood at 36.5 percent in the January-March period, up 1.5 percentage points from 35 percent a year earlier, according to the data by the government and the Bank of Korea.

The savings rate, which includes household, corporate and government numbers, rose 1.8 percentage points from three months earlier. It is also the highest reading since 37.2 percent reached in the third quarter of 1998.

South Korea's savings rate peaked at 41.7 percent in 1988 and dipped to a low of 31.8 percent in 2002. Numbers have been moving up steadily in recent years with the annual average hitting 34.3 percent in 2013 and 34.7 percent last year.

The rise in the savings rate has been attributed to weaker overall growth, slower income gains, a rapidly aging population and a spike in home rental costs.

"The rise in savings is directly linked to growing tendency to spend less," said Lim Il-seop, head of the financial research division at the Woori Finance Research Institute. "It may be the result of growing uncertainty about the future as more people prepare for old age and try to pay back outstanding debt."

Others said that slower-than-expected growth is exerting negative pressure on spending as people and companies prepare for harder times.

South Korea's economy grew 3.3 percent in 2014, but growth may fall to the low 3 percent range this year.

Reflecting this, Statistics Korea said the average propensity to consume for a household with more than two people hit 72.9 percent in 2014, the lowest number since related nationwide data was compiled in 2003.

It said this development has continued into this year with the average falling 2.1 percentage points on-year to 72.3 percent in the first quarter.

On the other hand, observers said that the recent hike in the savings rate is directly linked to a tumble in global crude prices that have helped reduced expenditures, particularly among households. This is a temporary trend and savings will likely fall in the long run, they claimed

"The percentage of people between 20 through 50 that positively affect savings rates hit its peak in 2011 and is currently on the decline," said Kwon Kyu-ho, a researcher at the Korea Development Institute. "This will translate into lower savings down the line."

He predicted the savings rate, which hovered at 33.3 percent in the 2005-2010 period, will likely fall to 27 percent from 2015 through 2020. (Yonhap)