A local think tank says the adverse effect of interest rate hikes on young people has led to reduced spending compared to other age groups.

According to a report released on Wednesday by the Korea Development Institute(KDI), people in their 20s and 30s have relatively smaller incomes but higher debt in proportion to assets.

The KDI said that the increased interest burden from rate hikes weighs more heavily on these age groups, in turn decreasing their economic activity.

A one percentage-point hike in the key rate led to a drop of 299-thousand won in annual spending by people in their 20s compared to 85-thousand won for those in their 50s and 30-thousand won for those 60 and older, according to the report.

The agency predicted that the loan delinquency ratio of young people may continue to rise more sharply than older age groups and expressed concern over the ripple effects of additional rate hikes.

The Bank of Korea has kept the benchmark rate unchanged at three-point-five percent since February.