Economics in a picture
The consumption of individuals with higher average expenditure was more affected by the pandemic
Detailed information on payments with national cards confirms that the pandemic was a significant shock on private consumption in Portugal, but with different effects across types of goods and services purchased, consumption groups and regions. By consumption groups, the reduction in spending was less pronounced and the subsequent recovery stronger in the medium/low consumption group (which aggregates the 50% of cards with lower average spending at the national level in the previous 12 months). In contrast, the biggest negative impact of the pandemic was felt by the high consumption group (corresponding to the 25% of cards with the highest average spending). This suggests that the significant increase in aggregate saving in 2020 was associated with this consumer group, which traditionally concentrates the largest part of households’ savings. The more limited impact in the case of the lowest consumption group points to the effectiveness of income protection measures for the most vulnerable households.
The different evolution of payments across consumption groups reflects, to a large extent, the structure of the consumption baskets, in particular the higher weight of services in the expenditure of the high consumption group and of food products in the expenditure of the medium/low consumption group. Behavioural responses reinforced these patterns, probably reflecting differences in the incidence of remote work and consumption needs related to lifestyle adjustments imposed by the pandemic.
For more details, see Cabral, Manteu, Serra and Silva (2021) “Consumption expenditure during the COVID-19 pandemic: an analysis based on Portuguese card transaction data”, Economic Studies, Banco de Portugal, Vol. VII – Nº. 4, October.
Prepared by Sónia Cabral, Cristina Manteu, Sara Serra and Cátia Silva. The analyses, opinions and findings expressed above represent the views of the author and not necessarily those of Banco de Portugal or the Eurosystem.
If you want to receive an e-mail whenever a new “Economics in a picture” is published send your request to email@example.com.