Due to price increases, 29% of Romanians are saving less in their accounts or no longer saving at all, and a quarter of them say they have changed the way they save money or invest, according to a recent study conducted by Ipsos for ING Bank

These figures are also supported by ING’s internal assessments between January and June 2023, which show that 39% of those entering the ING Banometer relationship have no savings or no savings at all.

On the other hand, investing in financial products and material goods is not a priority for many Romanians: 58% of respondents say that they rarely or never invest in stocks/bonds/mutual funds, as well as in real estate or securities.

“The impact of rising inflation on consumption behavior is complex and usually manifests itself with a certain inertia. Thus, it usually takes a few good quarters before consumers really notice changes in their disposable income and start adjusting their consumption,” explains Valentyn Tetaru, Chief Economist at ING Bank Romania.

In turn, consumption is also strongly affected by the growth of interest rates, which, on the one hand, stimulates savings, and on the other hand, raises loan rates, the effect is also an adjustment of consumer behavior, the chief economist adds.

“To the extent that this situation persists over a longer period of time, even quasi-permanent changes in consumption and saving behavior may occur. Thus, when inflation and interest rates begin to fall, consumers may continue their prudent behavior from periods of high inflation for a long time, and it will take a relatively long period of consistent increases in real wages to return to pre-inflationary consumption behavior.” concludes Valentyn Tetaru.

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

According to an Ipsos study, more than 70% of Romanians spend more of their income on food/daily shopping and energy than five years ago, and more than 65% expect that they will continue to do so in five years.

To cope with inflation, 50% say they have cut their spending on clothes and restaurants/bars, while 48% are budgeting less for travel.

Banometer’s assessment shows that not being able to maintain the same lifestyle due to inflation also takes an emotional toll. As a result, frustration grows, but so does consumption, especially for those with higher incomes.

According to the cited study, 48% of Romanians can no longer afford to save due to inflation, and only 11% are saving more money to face a more expensive future, as evidenced by multiple price increases.