COVID-19, SAVING RATE AND THE SURGE IN INFLATION: SOME EVIDENCE ON ITALIAN HOUSEHOLD CONSUMPTION
- N°1 - Marzo 2023
A cura di
Davide Cassese , Valeria Ferroni , Valeria Macauda
Over the last three years two shocks affected households consumption: Covid-19 and the surge in inflation. During the Covid-19, in Italy, as in other advanced economies, the propensity of households to save has reached extraordinary levels. In the second half of 2021, the rise in inflation, together with a less lively wage growth compared to prices, led to a decline in the purchasing power of households, generating asymmetrical effects among different income classes. This work investigates the reasons underlying the slow recovery path shown by Italian household consumption in the post-pandemic period: together with precautionary and forced circumstances, the concentration of savings among the richest households, characterized by a lower propensity to consume and greater financial activities, is one of the main reasons. In addition, by analysing the rise in prices and its cost-push origin, we evaluate the distributional effects of inflation, measuring the inflationary differential between the 1st and 5th quintile of households. The asymmetric distribution of savings among households and the larger impact of inflation on low-income ones could contribute to moderate the households consumption, despite the various fiscal measures implemented.