Spain | Inequality limits the role of savings in the face of new shocks

Savings levels can be key to protecting households against energy price increases, like in the scenario we are currently experiencing. For example, during the previous inflationary episode, families chose to maintain their consumption even as their purchasing power deteriorated. Thus, when gross disposable income fell by 1.2% in real terms in 2022, household spending increased by nearly 5%. The way they financed this was through a decrease in the savings rate, which stood at 9.2% of disposable income that year, compared to 14.5% in 2021 or the 12.1% average for the 2022-2025 period (see Figure 1).

Reducing savings in a context of uncertainty can make sense when households perceive the disruption to be temporary and seek to smooth their consumption. This allows for less volatile spending trends and avoids drastic adjustments that families view negatively. Looking ahead, in an environment marked by rising fuel costs, it is worth asking about the capacity of household savings to absorb shocks.

On the one hand, the savings rate remains at historically high levels, although the room to reduce it is smaller than in 2022. In the first quarter of 2026, household savings reached 11.3% of gross disposable income, above the historical average of the last 25 years (9.7%). If we were to observe an inflation increase over the coming quarters similar to that recorded in 2022, maintaining the growth path of private consumption would require bringing the savings rate down to levels around 7% of gross disposable income, similar to those seen in some years during the past decade. Therefore, this suggests that, in aggregate terms, while there is some buffer to absorb an adverse shock, this room for maneuver is smaller than in 2022.

However, these surpluses differ by income level. In particular, according to BBVA Research estimates based on the 2024 Household Budget Survey, households in the highest income decile save almost 50% of their disposable income, whereas families in a more precarious situation show savings rates that can even be negative (see Figure 2). Therefore, the ability to dip into savings clearly increases with income level, while vulnerability is concentrated in lower-income households.

Furthermore, households with fewer resources have a higher propensity to reduce their savings rate when faced with drops in income (controlling for other characteristics). For example, given similar declines in income, the savings rate of households in the lowest income decile would fall two to three times more than that of families in the highest income decile.

Other relevant household characteristics that help assess where there is room for the savings rate to act as a shield are the employment status of the primary earner, housing tenure, and family size. All else being equal, being unemployed is particularly detrimental to the savings rate of households in the lowest income decile and less so for those in the highest. Living in a market-rate rental reduces saving capacity in the lowest income deciles, while access to subsidized housing generally increases it across the board. Finally, households with more members generally have a smaller savings margin.

What are the implications for economic policy? In the face of potential shocks that could drive up inflation, like those we have experienced in recent years, a portion of the population would be prepared to use savings as a mechanism to maintain their consumption levels. However, for the rest, it would be necessary to intervene by targeting aid toward low-income households where the primary earner is unemployed, with a relatively high number of household members, and without access to subsidized housing.