Despite the exorbitant increase in prices and after suffering a deep downturn in 2020, Spanish household consumption has gradually recovered until it was able to recover the pre-pandemic level at the end of 2023. It has not been easy. To achieve this they have had to use more credit, moonlighting and overtime.
The main strategies have been to look for offers on purchases and reduce savings and spending levels. In this, Spanish families behaved in a similar way to European ones. On the other hand, where they diverge is in other behaviors, with Spanish women resorting much more to credit and looking for a second occupation or working more hours.
These two formulas, plus credit and moonlighting, are the “ways to cushion the impact of rising prices on consumption, especially in the case of households with reduced liquidity buffers,” states the article “The reaction of households to the rise in prices in Spain in the EMU”, published this morning by the Bank of Spain. It shows how Spanish families resorted 2.3 percentage points more to consumer credit than the average in the eurozone, which coincides perfectly with the more dynamic evolution of consumer credit in Spain recently observed in Spain. In this way, the rebound in household income combined with this dynamism in consumer credit allowed the path of recovery of family spending to continue in 2023.
As for working more, the percentage of Spaniards who have had to do so to adapt to higher prices is 1.2 percentage points higher than in the eurozone. This assessment agrees with Eurostat data which shows that the proportion of unemployed people in Spain increased by 6.8% between September 2022 and September 2023, while in the euro zone the increase was only 1%.
And going into more detail, the author of the Bank of Spain article, Carmen Martínez, points out that those who have had to increase their working hours the most are young people, women, people with a lower educational level and those who live rented.
Furthermore, it is a trend that will continue. In the ECB survey on consumer expectations (CES), it is observed that the percentage of people who plan to resort to an increase in their working hours, labor supply is eight points higher than what they have actually done in the last twelve months. A survey that focuses on the period August and October 2023.
The way to adapt to rising prices also varies depending on liquid assets of a certain amount. In households with little savings available immediately, they are the ones who have looked for a second job the most, who have used credit the most and who have had to cut spending the most.
