A customer shops at a department store in Seoul, Sunday. Yonhap

The popularity of affordable Christmas decorations and festive foods is on the rise, driven by a growing number of consumers opting for budget-friendly alternatives to more extravagant choices, market watchers said Monday.

However, equally in-demand are premium products offered by hotels and high-end bakeries are, indicating a trend of polarized spending amid a prolonged economic slowdown.

According to Homeplus, a popular retail chain, its Christmas cakes are priced at under 25,500 won ($17.23),40 percent more affordable than those from upscale bakery brands.

Similarly, CU, a convenience store chain, has introduced mini cakes priced at approximately 7,000 won, catering to budget-conscious consumers.

Earlier this month, the convenience store chain 7-Eleven announced plans to launch 13 Christmas cakes and desserts for the winter season at a 25 percent discount. Last December, the store saw a 15 percent increase in cake and dessert sales compared to the previous year.

On the luxury side, Hotel Shilla began selling a "Taste of Luxury" cake priced at 400,000 won, while Lotte Signiel and Walkerhill have also introduced their own high-end options.

"More consumers are turning to affordable products, strained by reduced spending power due to high inflation. High-end products see steady demands," an industry official said.

Christmas decorations sold at Daiso, a discount store, including LED lightings, jumped 63 percent from a year ago. Sales of decorative trees climbed 26 percent.

Window decoration stickers sold at Emart for 3,900 won saw a 30 percent increase in sales.

The retailer has increased its inventory by more than 150 percent, expecting sales to double this year compared to last year.

"The growing demand from people seeking affordable items that still capture the festive spirit is driving the increased popularity," the official said.