Survey: One in two Romanians cannot afford to save because of inflation

One in five Romanians is spending carefully, hunting for deals, and keeping track of their income and expenditure on a regular basis, in order to enjoy financial stability, according to a recent survey conducted by Ipsos for ING Bank. At the same time, 48% of Romanians can no longer afford to save because of inflation, and only 11% set aside enough money to face a more expensive future, already flagged by numerous price increases.

The survey also reveals that only 24% of Romanians are interested in their financial education and look for information online, while 57% rarely or never turn to experts or specialist consultants to discuss their financial situation. These financial behaviors caused by inflation were also identified by Banometru, the free financial health program developed by ING Bank, the Association for Real Life Education (AEVR)  and the Association for Community Relations (ARC). In the first six months of 2023, Banometru was used mostly by people with an income equal to or lower than their monthly expenses due to price increases, who could no longer maintain the lifestyle they were used to and were looking for support in restoring financial balance.

A third of Romanians save less. Investing in financial products and material goods is not a priority

Due to rising prices, 29% of Romanians are saving less in their accounts or not saving at all, and a quarter say they have changed the way they save or invest their money. These figures are also confirmed by the Banometru assessment carried out between January and June 2023, according to which 39% of the program beneficiaries do not have a savings fund or do not save at all, nor do they plan or measure their budget.

On the other hand, investments in financial products and material goods are not a priority for many Romanians: 58% of respondents say they invest very rarely or not at all in stocks/bonds/mutual funds, or in real estate or valuables.

“The impact of rising inflation on consumption behavior is complex and usually manifests itself with certain inertia. Hence, it usually takes a few quarters before consumers really notice the change in their disposable income and start to adjust their consumption. The latter is also strongly influenced by rising interest rates, which on the one hand stimulate saving and on the other hand increase rates on credits, the effect of which is also an adjustment in consumption behavior. If these circumstances last for a longer period, there may even be quasi-permanent changes in consumption and saving behavior. Thus, when inflation and interest rates start to fall, consumers may prolong their cautious behavior from periods of high inflation and it will take a relatively long time of consistent real wage increases to return to pre-inflationary consumption behavior” – Valentin Tătaru, Chief Economist at ING Bank Romania.

Romanians are spending less on clothes, restaurants and travel to cover rising prices

Over 70% of Romanians are spending more of their income on food/daily shopping and energy than five years ago, and more than 65% expect to continue to do so in five years’ time, according to Ipsos survey.

To cope with inflation, 50% say they have reduced their spending on clothing items as well as restaurants/bars, while 48% are allocating a smaller budget for travel.

The Banometru assessment shows that the incapability to maintain the same lifestyle due to inflation also has an emotional impact. As a result, there is a growing sense of frustration, but also a significant increase in consumption, especially for those with higher incomes. This new typology of people is seeking professional help to solve their problems.