The difference between savings and accrued debt falls 2.12%, with households raising cash and deposits in the third quarter to cope with rising cost of living
The impact of inflation is not only felt in the increase in the price of the shopping basket. The financial wealth of Spanish households, which measures the difference between the savings and the debt they have, registered a notable decline of 2.1% in the third quarter of 2022, coinciding with the peak of the CPI that occurred on July 10, reached 8%.
In just three months, the financial wealth of households went from 1.899 billion euros to 1.858 billion euros. A much faster decline than in previous periods and that makes the fall in the cumulative value of the year fat to 3.84%, as at the end of 2021 the difference between financial assets and liabilities was 1.933 trillion euros.
According to the financial accounts of the economy released this Wednesday by the Bank of Spain, household debt fell from EUR 772,997 million to EUR 759,777 million in the quarter. But the money they hoarded in financial assets (cash, deposits, debt securities, stocks, mutual funds, insurance, etc.) fell much more abruptly. Specifically, from the 2.67 trillion euros in which it was maintained in the first half of the year to 2.618 trillion, also far from the 2.694 trillion at the end of 2021.
This decline also reflects the impact of the poor behavior of the financial markets over the period analysed. Specifically, a negative revaluation of EUR 63,300 million, which outweighed the net purchase of assets, which amounted to EUR 50,400 million last year, was mainly concentrated in deposits.
Specifically, the largest share of household financial assets is held in cash and deposits (41% of the total), followed by equity holdings (29%), mutual funds (14%), and insurance and pension funds (13%).
The cash and deposits component gained the most weight in household financial assets (by 2.2 percentage points) compared to a year earlier. But if only the data for the third quarter is taken into account, it shows how households were forced to use that part of their financial savings to cope with the rise in the cost of living due to inflation. In concrete terms, the number of deposits rose from EUR 1.07 trillion to EUR 1.06 trillion in the quarter.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
