Rising prices affecting consumer habits

Inflation and skyrocketing prices strangle domestic economies and negatively affect the quality of life of Spanish consumers, who are increasingly forced to change their consumption habits.

The crisis is making itself felt in Spanish homes, with supermarkets increasing prices often way above the rate of inflation, causing consumers to act by changing their habits, a situation being monitored by the OCU consumer association, which, in April 2022, have carried out a survey of Spanish consumers, which was carried out in parallel in other countries of the Euroconsumers group, and allows for closer monitoring of how things have changed and how the inflationary trend and the impact of the war in Ukraine were influencing our consumption habits.

Now, 8 months later, they have consulted consumers on these issues again, and found, perhaps unsurprisingly, that the situation is much worse than last April: the more than 1,300 responses, a representative sample of the Spanish population, allowing them to draw interesting, and hard conclusions.

To begin with, they have asked users how they assess their financial situation: 35% of Spaniards consider it difficult or very difficult, a much higher percentage than a few months ago.

Only 15% of those surveyed consider that they have a comfortable economic situation, when in April that percentage was much higher, 28%. It is the country in the group where this difference has been most pronounced: the crisis not only affects those with a more difficult situation, but even those who had a healthier situation worsens.

In addition, 54% consider their economic situation to be worse than a year ago (compared to 38% in April) and 39% indicate that they have no room for manoeuvre for more price increases (compared to 34% in April).

According to the survey, only 17% are capable of saving more than 300 euro at the end of the month, while 22% live completely from day to day (almost half of those surveyed end the month saving 100 euro or less).

The result is that many are forced to dip into their savings: this is the case for 37% of respondents.

Others have been forced to ask family or friends for money (15%) or even request a loan in these months (11%) to meet their expenses.

Those who say they are in a difficult financial situation resort to this more frequently: 6 out of 10 dip into their savings, and a third have borrowed money from family and friends.

It is a fact: the economic situation, inflation, energy and food prices… are forcing Spanish households to take measures to cut costs. It is not for less, when 52% of those who say they have a difficult or very complicated situation indicate that they can barely afford to pay their energy bills or it is something that they cannot pay directly.

The vast majority of users have changed things due to the rise in prices: 93% have changed their energy consumption habits to reduce the bill, turning off lights, basically betting on turning off or lowering the heating, disconnecting devices to avoid standby , make more efficient use of household appliances… small changes that, although they affect the quality of life, have a moderate impact.

In addition, there are users who have gone further, changing companies in the past year (15%), modifying their rate or at least switching to the regulated market. 12% have chosen to buy more efficient appliances and some have invested in insulation or even switched to self-consumption.

It affects us more to change our food buying habits. According to the survey data, 90% of the Spaniards surveyed have changed something in their eating habits, changes that, to a greater or lesser extent, have a negative impact on the quality of their diet.

3 out of 10 users buy less meat or fish, 18% less fruit and vegetables, 23% less food overall, 2 out of 3 now buy more products on sale, or more white brands. More than half of the users now buy more in supermarkets with discounts or low cost.

In addition to adjusting food expenses, other spending items have also been cut quite a bit, such as leisure, travel or social or cultural activities…:  only 1% say they have not made any changes in recent months, but 39% say they have greatly cut their expenses on trips and vacations or getaways, 37% what they allocated to cultural activities, 33% the budget for leisure, sports (as 29% of the respondents) or spend less on clothing (23%).

As the survey reveals, not only is the number of households with difficulties growing, but there are fewer and fewer who have a comfortable situation. And consumers cannot be left with the worst part, they cannot be the ones who suffer the most from the situation, because many cannot pay their bills.

In view of this, the OCU are calling for a series of urgent improvements:

Urgently increase the amount and number of beneficiaries of the food aid payment.

The IVA reduction is applied to meat and fish, the main source of protein in the diet, so that its price falls and they can continue to be the basis of food.

The personal and family minimums in personal income tax (and the reductions in work and self-employment) are increased, which correspond precisely to the part of the taxable base that, because it is intended to satisfy their basic personal and family needs, is not subject to taxation. These figures have not been updated since 2015, and the landscape since then has changed a lot. It is fair to adjust these minimums, something that benefits everyone.

However, one thing they have not called for is for the supermarkets to stop exploiting the situation and exploiting the vulnerable by profiteering, which is clearly visible in the amount that many items have increased in price, and the profits being made by the supermarkets, something the government started to look at, but also, so far, have avoided.