lower income families
Nearly half of the population reports feeling financially strained, and the effects ripple through the economy. Rising interest rates, now accompanied by persistent inflation, shape everyday life and decisions. A recent IESE study led by José Luis Nueno, titled Everything is terrible, but I am fine, examines 19 million purchases from 250,000 consumers. The data come from the AECOC association and are drawn from a database managed by Fintonic and Intent HQ. The study notes a striking split: people maintain personal optimism even as social conditions turn pessimistic due to higher borrowing costs and price growth. In this view, individuals tend to assess their own situation more favorably than the broader economic reality, yet Spanish society shows clear signs of financial strain caused by rising rates and inflation.
Nueno points out that most Spaniards live beyond their means. This leads to a nuanced, somewhat bleaker forecast for the near future. The research highlights social polarization, with demand for both luxury goods and discount options growing at the same time. Inflation data reveal a widening gap: last year, the lowest income group faced inflation that was roughly 20 percent higher than that experienced by the highest income quintile. Consequently, lower and middle income households reduce discretionary spending while some of the lower income group actually increases certain expenditures. For business leaders, the findings suggest that segments that do not target either the wealthiest or the most price-sensitive consumers could face tougher competition and slower growth this year. Rather than a single, uniform trend, the data point to divergent consumer paths that reflect differing financial realities across income levels.
the impact on spending behavior
The inflation and higher interest rates have a direct effect on Europe and Spain alike. Economists emphasize a clear connection: wage stagnation in many sectors coincides with higher debt service costs, pushing a larger share of households toward tighter budgets. At the same time, the purchasing power of wealthier households can be influenced by the willingness of distressed firms to adjust prices downward. When households face rising costs, everyday items can feel like a heavier burden, especially if households lack a cushion from prior years. In communities where households have trimmed nonessential purchases and still must balance essential needs, the sense of scarcity can become a defining feature of financial life. In such settings, the contrast between visible luxury and everyday affordability becomes more pronounced, underscoring the broader economic divide inside the society.
Experts warn that the widening gap between income groups could intensify social and market polarization. For entrepreneurs and retailers, the takeaway is clear: product lines that ignore either end of the income spectrum risk losing relevance. Economic pressures do not disappear overnight; they reshape consumer choices, brand loyalty, and shopping channels. The study suggests a future where households prioritize essential goods while still seeking occasional indulgences, complicating the landscape for brands that rely on a single price tier. The overarching message is that rising interest rates and inflation do not just affect macro indicators; they penetrate kitchen tables and daily routines, influencing budget priorities, savings behavior, and long-term financial planning. This dynamic is not simply a Spanish phenomenon; it offers a lens through which many markets can assess how households adapt when borrowing costs rise and prices climb. The insights call for thoughtful pricing strategies, accessible financing options, and clear value propositions that speak to both prudent spenders and aspirational shoppers.