Spending more, saving less: Czech households much worse off compared with last year

More households are slipping toward the poverty line due to high inflation and vanishing savings.

Thomas Smith

Written by Thomas Smith Published on 01.12.2022 12:30:00 (updated on 01.12.2022) Reading time: 2 minutes

Inflation is biting hard. A study named “Project Czechia,” which tracks how much households are spending and saving compared with the year-earlier period, finds that fewer people in Czechia are able to keep their heads above water. With the traditionally spending-heavy Christmas season now here, this may be a problem for many.

Do you have less disposable income now than 12 months ago?

Yes 72 %
No 13 %
About the same 14 %
90 readers voted on this poll. Voting is open

According to data from PAQ Research, more than a third of households in the country have no money whatsoever left over at the end of a month. Just last year, less than 20 percent of people were in the same situation.

When asked about how much more money they spent in November 2022 compared with the year-earlier period, households said they spent CZK 2,573 more on housing-related expenses and CZK 600 more on food.

FAST FACTS ON COST-OF-LIVING CRISIS

  • About 6 in 10 Czechs plan to spend less when buying presents this Christmas.
  • Two-thirds of people will not take a winter vacation because of the current financial climate.
  • People living below the poverty line in Czechia have increased from 9 percent of the population in 2021 to 16 percent (as of May 2022).
  • Over 157,000 Czechs regularly are in arrears in their energy bills.
  • A total of 650,000 people in Czechia are at risk of energy poverty.
  • The average household spends 30 percent of its total income on housing.
  • Fewer than half of Czech households are able to manage expenses from their regular salaries.

    Sources: Seznam Zprávy, iRozhlas, ČTK, iDnes.

Less money at end of month

According to Eliška Dvořáková from PAQ Research, families with below-average incomes save an average of CZK 700 per month collectively. Last year, this figure was almost three times higher, at about CZK 3,000.

Households living below the poverty line were last year able to save CZK 565. This year, worryingly, they simply spend more than they earn – by CZK 277. Furthermore, 76 percent of families who live below the poverty line now have nothing left by the end of the month.

High-income families, despite enjoying more comfort, are also an example that the inflationary environment is affecting everyone. They are presently seeing a decline in disposable income of 25 percent, from CZK 20,300 monthly last year to CZK 15,000 in November 2022.

Everything going up

This crisis “is mainly due to the fact that Czechia has been dealing with the effects of inflation in the fields of energy, housing, and food for a year now. That is why more and more households are facing financial problems," says Dvořáková.

Inflation, which has been trending at more than 15 percent every month since May, has spiked prices up.

Everyday items such as sugar, milk, butter, and meat are now costing consumers considerably more money than last year according to the Czech Statistical Office

The price of sugar more than doubled in October year on year, and the cost of eggs has gone up by 50 percent. Meat has risen by 27 percent, and bread by 30 percent.

Government-assistance programs, such as energy subsidies and price caps (which will save households around CZK 3,500 by the end of the year) and welfare payments will somewhat help the situation, but rampant inflation in almost all areas of life will make Christmas difficult for hundreds and thousands of households.

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