Salaries are no longer enough to keep up with price increases. Despite efforts by various administrations to cushion the impact, rising costs are starting to bite at the household level, hitting budgets hard. The strain is noticeably greater in the Valencian Community.
In the Valencia region, up to 86% of households in Alicante, Valencia, and Castellón report already feeling the effects. Inflation sits about four percentage points above the national average, according to a European consumer payments report by Intrum, a company that specializes in credit management and collections and also owns a real estate arm called Solvia.
Around two-thirds of those surveyed say they have already altered how they manage monthly spending to cope with shrinking purchasing power. Social life is among the first areas affected, as expected.
Until about 63% of respondents report reduced freedom to spend, either limiting outings with friends or family or cutting back on leisure activities. This trend is higher than the national average, with 58% of families signaling cutbacks to balance monthly accounts.
Additionally, as inflation bites, 62% of Valencia Community residents say they have shifted more of their shopping to discount stores where private brands dominate, at the expense of leading brands. The gap with the rest of the country is 11 percentage points, underscoring heightened concern about inflation in the region.
cheap gifts
There is also disappointing news for holiday shoppers: 46% plan to spend less on gifts for family and friends this year (45% nationwide), a trend likely to show up at many store checkouts this Christmas season.
Not surprisingly, people look for ways to stretch their money, with 35% of those surveyed by Intrum already claiming they hunt for offers and discounts.
A sign of the season, the Black Friday surge in Alicante is marked by more online sales but with fewer initial discounts for shoppers to exploit.
Inflation is also reshaping the value of everyday services, including open-source entertainment like TV subscriptions and internet plans. Specifically, up to 32% of respondents report canceling one subscription as a deliberate savings move.
On the flip side, only 11% plan to reduce charitable donations or NGO support and 8% would cut back on savings. It should be noted that a large portion of the population has already had trouble saving, so residents who can set money aside tend to accumulate more as a precaution against what may come next.
As the report emphasizes, one of the clearest effects of rising prices is a reduction in consumption, with repercussions for commercial activity and overall economic growth. Financial literacy becomes even more critical in this environment; more than four in ten Spaniards feel they do not have enough education to manage their personal finances effectively. This is echoed by the managing director of Intrum Spain, who notes the challenge to navigate daily finances without losing control.
Further, up to 66% of those surveyed in the community (62% nationally) said that inflation makes them question how much money is spent on nonessential items. People are more mindful of every euro when prices climb.
defaults
Inflationary pressure tightens family budgets, heightening concerns about the future. Even after adjustments in spending, 31% of Valencians (21% nationwide) report not paying all bills on time in the last 12 months. The leading reason remains insufficient funds at the moment of payment (56%), a figure slightly higher than the national rate (48%).
These numbers could rise in the coming months. About 41% of Valencia’s consumers anticipate energy costs increasing further and fear they may struggle to pay bills if prices continue to rise. This places Valencia about seven points below the European average of 35% for such concerns.