The pandemic door was not yet closed when the war window opened, dispelling any ounce of optimism about the future. European consumer confidence has plummeted since February and confidence in leaders’ ability to manage rising prices is waning. In fact, in Portugal, inflation is assumed to continue indefinitely, exacerbating the fact that six out of ten Portuguese are financially worse off than last year, according to the European Consumer Payment Report 2022, promoted by Intrum, presented in this edition more than 24 thousand citizens from 24 countries in Europe.
The scenario of economic instability and geopolitical uncertainty leaves consumers “feeling even more uncertain than during the darkest days of confinement,” the report said. Luís Salvaterra, director general of the credit management company, explains to Dinheiro Vivo that the issue transcends financial condition and that people are mentally affected: “Inflation weighs on households’ daily income, leading to a loss of power purchases and a decline in living standards.”
“Bill anxiety” is real, with more and more consumers worrying about bills because they don’t know if they will pay more each month. In fact, more than 70% of the Portuguese surveyed believe that their fixed costs are evolving faster than their wages. The value is similar to 51% in 2021, representing a 22% year-over-year increase, partly justified by companies failing to balance wage increases with inflation, which reached nearly 11% in October, notes the same responsible on.
On the other hand, with the successive rises in interest rates affecting household loan repayment terms, the effort rate is getting higher and in some cases unbearable, with a third of respondents admitting with less than 10% of the amount paid amount left behind. pay off monthly debts. Debt may become a trend, with those who see credit cards as a solution at greater risk. “It’s not good policy,” emphasizes Intrum’s director-general, warning of a spiral from which it is rarely possible to get out. “If they have problems, they should contact creditors and try to negotiate new payment plans,” he advises.
For now, loans to pay bills remain unchanged from last year. In Europe, a quarter of people (26%) have borrowed money or reached the credit card limit to pay bills in the past six months, compared to 27% in 2021. . Of those who now borrow money monthly in addition to their mortgage and credit card, 37% borrow more than 10% of their income and 13% borrow more than 25%.
The reality is that if two years ago households had the opportunity to save given the stagnation of consumption, they now feel that inflation, which has risen to historic levels in several countries due to the conflict in Ukraine, has a negative impact on their finances, the effect is general, with the Portuguese territory revealing a percentage in line with the European average (83%). What changes significantly, according to the survey, are the eyes facing the situation: 71% of Portuguese say they are no longer optimistic about the future, while in Europe the percentage drops to 61%. The reason for this difference? “We have been living in crisis for a long time, we have no period of stability and we do not see the end of the war,” says Luís Salvaterra.
“It takes a long time for positive things to happen in our country. While in other countries, such as Spain, inflation and prices are already starting to fall, in Portugal this is not happening, although it should, because energy costs have fallen “Sometimes the price rises because it has to offset production costs, sometimes it’s just speculation,” adds the CEO.
Across Europe, almost half of respondents (46%) believe there is little central banks can do to curb rising prices, worrying 54% of Portuguese, especially with regard to the cost of food and energy. There are already people who fear for their financial well-being next year, namely lower-income workers, who are struggling to stretch their salaries to accommodate the evolution of bills. Many are also those who see the “saving cushion” that they managed to collect during the quarantine.
With sacrifices expected in the near future, 63% of families are trying to pay bills on time, set goals for managing bills and savings, and are trying to save some extra money. However, making a nest egg in times of inflation is no easy task.
Mariana Coelho Dias is a journalist for Dinheiro Vivo
Source: DN
