Published on Wednesday, May 3, 2023

Spain | Who wins and who loses from inflation?

The global economy offers households no respite. After the turbulent years of COVID-19 in 2020 and 2021, 2022 kicked off with the outbreak of the war in Ukraine, increasing the high geopolitical uncertainty and an unprecedented level of inflation in the last 40 years.

Key points

  • Key points:
  • While it is true that inflation affects everyone, it is also important to understand that it does not affect everyone in the same way. This is the basis of the latest BBVA Research study "The Heterogeneous Impact of Inflation on Households’ Balance Sheets", in which we analyze the three main channels through which inflation impacts the Spanish households.
  • The first of these is well known by economists as the "Fisher channel", which captures how inflation redistributes real wealth from lenders to borrowers in nominal assets, such as deposits, bonds or mortgages.
  • The second channel is income. Since most incomes are not inflation-linked (at least in the short term), households lose purchasing power in real terms as prices rise.
  • And the third refers to the effect on consumption. Inflation does not affect the prices of all goods and services equally. Therefore, given that individuals purchase different baskets of goods and services, an increase in prices will have a different impact on households depending on the composition of their expenditure.
  • To study the magnitude of these three channels we have used the anonymized and aggregated data of more than one million BBVA customers for whom we know the amount of their salary or pension, their asset and liability balances (deposits, mortgages...) and their consumption categories through their financial transactions using different payment methods.

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