Incomes shrink on inflation

The perfect storm is looming for thousands of households: rising mortgage payments, persistently high energy prices and continued increases in food prices – evidence that sectoral inflation is still on the rise – are adding up into an explosive cocktail that could push up spending in an average household by as much as 300 euros a month compared to pre-inflation crisis levels.

That is despite the subsidies provided for electricity and natural gas, which are financed by hundreds of millions of euros on a monthly basis.

For a household with a family income of €2,000 per month, this €300 euros can cause a loss of annual income of 13%-14% and effectively deprive a family of a month and a half’s income. The impact will be much harder on the poorest households, which is why any discussions about the next support measures – both on the food front and on borrowing costs – are focused on the most financially vulnerable households.

Signs of a slowdown in inflation in both October and November are positive, but by no means entail a decline in prices. Essentially, the ever-increasing cost of food is added to the already expensive electricity, gasoline and natural gas.