Shrinking value

How inflation is eating away at savings

Although the piggy bank is filling up, the value of financial assets is falling.

(Bild: dpa/Peter Kneffel)

Austrians are richer than ever - 872 billion euros in financial assets is a record. But this is only good news at first glance: in real terms, i.e. adjusted for inflation, financial assets have been falling since 2022.

In June, it fell by one percent in real terms compared to the previous year, and the purchasing power of assets also shrank in 2023 (-5.1 percent) and 2022 (-10 percent). "We are therefore not actually getting richer," says Johannes Turner from the SNB.

More wages are not flowing into consumption
In fact, Austrians are saving significantly more and investing less in consumption; uncertainty is high. Although real incomes have risen by 3.2 percent, people are not buying more. This is weighing on the economy, which is not benefiting from wage increases as hoped.

23.4 percent of spending goes on housing, which has risen from just 21.8 percent before coronavirus. Food accounts for 13.5 percent of expenditure, while 13.1 percent is spent in restaurants and hotels.

A lot of money is in savings accounts
What is left over at the end of the month is saved. At 11.4 percent, the savings rate is currently high. In this country, a particularly large amount goes into deposits (savings accounts). Due to the high interest rates, many people have shifted their savings: Only 61 percent of savings were still available on a daily basis in June, compared to 70 percent before interest rates were raised. The fact is, however, that even with a higher interest rate and a longer commitment period, the income on savings accounts does not even cover inflation. 

And there have also been shifts in loans. The majority of them now have fixed interest rates. This is how households react to interest rate fluctuations, says Turner.

Remarkably little is invested in (retirement) provision products. Only 15 percent of financial assets are tied up in these products, compared to an average of 29 percent internationally. The Bundesschatz, which allows citizens to invest in government bonds, has been very popular in recent months. Two billion euros were spent on this.