In 2022 Italian families burned 41.5 billion of their savings in an effort to maintain their standard of living, due to high energy costs and inflation. The standard of living is now threatened by unavoidable costs, with the share of a household’s monthly spending absorbed by utilities and housing costs now standing at 45.8%, up from 35% in 2019, as reported an investigation by Confesercenti.
The consequences of the high cost of living on families
According to Confesercenti, the impact of inflation on families is particularly heavy, especially on those with medium-low incomes. For less well-off households, which represent 40% of the total, or about 10.5 million, fixed costs will cover about half of the entire monthly expenditure (49%), leaving less room for other expenses. When expenses for clothing, drinks and food are also considered, the part of the budget consumed by compulsory or quasi-compulsory expenses rises to 77%, leaving only 23% available for other expenses.
Spending habits have changed significantly, even for those on higher incomes. For the 40% of middle-income households, the share of the budget consumed by bills and housing costs rose from 35% in 2019 to an estimated 45% this year, while food and beverage spending fell from 25% to 23%. % and the share of the budget available for other expenses has decreased drastically, going from 40% to 32%.
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Purchasing power and consumption in 2023
The The negativity of the situation is also confirmed by the analysis of available income. According to Confesercenti estimates, by the end of 2023, the purchasing power of employees will be 2,800 euros lower than in 2021, while for the self-employed, their spending power would decrease by 2,200 euros.
This is the result of a inflation rate estimated at +5.6% on average for 2023, with a consequent increase in prices of +14.1% in the two-year period 2022-23. As a result, household spending will only increase by +0.5% this year, a disappointing result, due almost entirely to the increase in compulsory spending.
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Comparison with the pre-pandemic period
Only expenses for utilities and groceries have seen growth compared to the pre-COVID period, +45.5% and +6.1% respectively. Even the furniture categoryobjects and services for the home (+3%) recorded positive growth thanks to tax incentives. All other categories have a negative sign: in 2023 spending on leisure, entertainment and culture will still be 24.6% lower than in 2019, spending on accommodation and restaurants will settle at 20.6%, communications at 19.7%. Following in the ranking of the most “cut” categories compared to the pre-COVID we find: instruction (-17,3%), clothing and shoes (-15,2%), transport (-11.1%), Other goods and services (-11%), drinks alcohol and tobacco (-9.7%), e health and medical expenses (-5,5%).
“Covid, high energy costs and inflation have revolutionized household budgets in a negative sense in the last three years, leading to a real collapse in spending for the vast majority of consumption items”, comments the President of Confesercenti Patrizia De Luise. “The indicators for 2023, with inflation that will come close to 6%, confirm the difficulty of the situation: the risk is that the slowdown in the recovery in consumption will have serious consequences on the country’s growth prospects. It is essential to act with expansionary economic policies and to support purchasing power and consumption”.
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