Spain’s household savings rate fell to its lowest level on record in the third quarter of last year as high unemployment and wage deflation in the latest recession obliged them to devote more of their disposable income to consumption, according to figures released Wednesday by the National Statistics Institute (INE).
The INE said that on a moving average over the period of the fourth quarter of 2011 and the third quarter of 2012, the savings rate in the latest quarter was down 0.6 percentage points at 8.8 percent from the previous three-month period. The moving average is used to smooth out wide fluctuations in spending over the course of the year.
That was the lowest rate since the INE began compiling the statistical series in 2000. The rate reached a record high in 2009 as families put more income by in anticipation of a further deterioration in the economic situation, which proved to be the case. Output is estimated to have contracted 1.5 percent last year.
The main reason for the drop in the third quarter was falling income. The INE said net disposable income in the period declined 1.6 percent from a year earlier to 164.675 billion euros. This in turn was the result of a 5.4-percent contraction in salaries and a fall in other sources of net income such as interest on bank deposits and share dividends of 4.4 percent.
At the same time household spending in the period increased 0.6 percent from a year earlier, resulting in a decrease in savings of 26.8 percent to 12.487 billion euros.
“These figures show that consumption is falling less than disposable income is, indicating that people are drawing on their savings to maintain consumption as best they can,” Reuters quoted M&G Valores’ director of analysis, Nicolás López, as saying.