Spanish savings levels down
Households are finding it hard to save as they feel the pinch of the property gloom and rising inflation.9 April 2008
MADRID - Spanish households are finding it increasingly difficult to put money aside for a rainy day as hefty debt taken on during a property boom combined with higher mortgage costs and inflation stretch incomes.
According to figures released yesterday by the National Statistics Institute (INE), household savings last year fell by 0.2 points to 10.3 percent. That was the lowest rate ever since the INE began to compile household savings figures in 2000.
Households have been increasingly feeling the pinch from higher interest rates. The European Central Bank has raised its key refinancing rate eight times by 25 basis points each time from rock-bottom levels at the end of 2005 to 4 percent at present.
This in turn has been pushing up reference interbank rates for setting mortgage rates, a situation that has been exacerbated by the global credit crunch unleashed last summer as a result of the fallout from the US subprime crisis.
Sharply higher oil prices have also pushed up transportation and heating costs. Higher food prices for basic consumer basket items such as bread, milk and chicken have also eaten into income. Consumer price inflation in Spain ended at 4.2 percent last year and has subsequently risen to 4.6 percent.
[El Pais / Expatica]