That in times of crisis the most affected are always the poorest households is evidence. Yesterday the Bank of Spain certified that statement in a report based on statistical data that shows that "in the face of an increase in nominal spending on energy consumed at home, families with a modest cushion of liquidity have reduced spending on other goods."
The banking regulator emphasizes that these families are "mostly low-income", in which the increases in the electricity bill have a greater impact since "the energy bill absorbs a greater proportion of their income." On the other hand, families with more resources "have not substantially changed their spending levels in other items" because they have financed it "through a temporary reduction in their savings rates."
These are some of the conclusions of the article The impact of the rise in inflation and the war on the economic prospects of 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 affirms that this index "showed in March its second largest decline in the historical series (which begins in July 1986), only surpassed by that registered at the beginning of the pandemic."
The banking regulator adds that "households now anticipate a less favorable evolution of their income, their asset position and the general economic situation."
And this, despite the fact that during these August holidays there is a certain propensity to spend more than in other months. The Bank of Spain clarifies that "the outlook for holiday spending has maintained a recovery profile even after the outbreak of the war, except in lower-income households, which have less margin to absorb increases in inflation without reducing their spending levels and have been more affected by the spike in energy prices.”
Where a withdrawal of spending has been noticed first is in large purchases. "Consumers have lowered their expectations of spending on home equipment and automobiles in recent months, and in particular, since the start of the war," details the supervisor. The month of July, for example, which used to be one of the best-selling months for automobiles, ended with a new decline in sales, of 12.5%.
This complicated situation for families with fewer resources comes just when the rise in interest rates will increase the financing costs of families. Once again, those most affected will be the households with the least income and those with the most debt.
