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    Poorer families reduce their regular consumption due to higher electricity prices


    August 9, 2022 - CE Noticias Financieras

     

      That in times of crisis the most affected are always the poorest households is a fact. Today the Bank of Spain has certified this statement in a report based on statistical data showing that "in the face of an increase in nominal expenditure on energy consumed in the home, families with a modest liquidity cushion have reduced spending on other goods".

      But, in addition, the banking regulator has recalled that these families are "mostly low-income" who suffer more from the increases in the electricity bill since "the energy bill absorbs a greater proportion of their income". On the other hand, the richest families (or the least poor) "have not substantially modified their levels of spending on other items" because they have financed it "through a temporary reduction in their savings rates".

      FORECAST

      The consumer confidence indicator recorded its biggest drop since the pandemic.

      These are some of the conclusions of the article "The impact of the upturn in inflation and the war on the economic outlook for Spanish households". The Bank of Spain analyzes the impact of the war and the rise in prices and uses the consumer confidence indicator prepared by the European Commission. The supervisor has stated that this index "showed in March its second largest decline in the historical series (starting in July 1986), only surpassed by that recorded at the beginning of the pandemic".

      The banking regulator adds that "households now anticipate a less favorable evolution of their incomes, their asset position and the general economic situation".

      And this, despite the fact that during these August vacations a certain propensity to spend is perceived to be greater than in other months. The Bank of Spain has clarified that "the outlook for vacation spending has maintained a profile of recovery even after the outbreak of the war, except in lower-income households, which have less margin to absorb inflation increases without reducing their spending levels and have been more affected by the spike in energy prices".

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