Some determinants of the post-pandemic weakness of household consumption

Abstract

Rationale Household consumption in Spain has shown considerable weakness following the pandemic and its recovery has been less marked than would have been expected based on income developments. This article characterises the types of households and the items in the consumption basket that have contributed most to this slackness. Takeaways •By consumption basket component, in 2023 average spending on durable goods (particularly cars) and semi-durable goods (in particular, clothing and footwear) posted the largest fall in real terms compared with 2019. Meanwhile, consumption linked to leisure and culture stood close to its pre-pandemic levels. •By household type, the largest gaps in average household consumption compared to pre-pandemic levels are observed in high-income households and households where the reference person is between 35 and 54 or is a foreign national. •Differences in consumption developments by type of household are related to heterogeneity across households in terms of both income developments and the composition of the consumption basket – specifically, the difference in the share of essential expenditure (food, rent, water and energy).