The number of people cutting back on spending in a rising inflationary environment has doubled compared to 2022
Even the Poles, Czechs, and Slovaks are spending more than Hungarians, according to a regional survey* by Publicis Groupe, now in its second year. The research looked at some of the most commonly purchased consumer categories, including sweets, soft drinks, medicines, pet food, and coffee, to see how people’s spending habits are changing in the face of a challenging economic environment. The survey covers four countries, including Hungary, and found that Hungarians were the most restrained in spending in all consumption categories in the last quarter.
The sensitive response of Hungarians to the economic downturn is the most striking in the region, with 41% reporting that they have reduced their spending. This is almost double the result a year ago (22%). For Czechs, this year’s figure is 22% compared to 15% last year, Poles 28% (20% last year), and Slovaks 25% (21% last year). It is fair to say that others – especially the Czechs – feel less exposed to the impact of inflation.
The responses show – and this was also true for Hungary and the other countries – that the need for more restrained spending is increasingly felt less by people fearing a prolonged war and more by the pressure of inflation. The data show that 58% of Hungarians cited inflation as the immediate cause and only 15% war.
The categories were similar in 2022: most Hungarians continue restraining their spending on holidays, restaurants, and sports equipment. They are also rethinking their spending on clothing, sweets, and durable food, either by switching to cheaper brands or buying fewer products. Some specific product categories are harder to give up, despite high inflation. Of the countries surveyed, Hungarians are the most likely to have changed nothing in the last three months in these categories: telecom services (41%), medicines (36%), hygiene products (34%), and coffee (30%). The general trend is that men have been more reluctant than women to change their shopping habits. An exciting change was observed across all nations: for alcoholic beverages, many purchases shifted to the online space. For Hungarians, this almost doubled to 15% compared to 8% last year.
Regarding securing the future and using financial and investment products, Hungarians are still among the most conservative nations. They prefer current account savings (61%) and have medium confidence in pension funds (18%), savings accounts (16%), mortgages (16%), life insurance (16%), and bonds (14%). Those investing the least are equity and mutual funds (8%), cryptocurrency (9%), gold and other precious metals (6%), fixed deposits (7%), and investing in real estate for spending (7%).
The researchers do not predict any significant change in the next quarter. They expect only minimal improvement for now, and then only in one product category, and believe that consumers will see stagnation as good news. “We see from recently released Eurostat data that domestic inflation is much higher than in many EU countries. Our research reveals that a significant proportion of consumers are reacting to price rises by significantly cutting back on consumption, to a much greater extent than citizens in neighboring countries” summarised Rita Horváth, Chief Media Officer at Publicis Groupe Hungary. According to Eurostat data, Hungary has one of the highest inflation rates among the EU Member States at 25.6%, compared to only 16.5% for our regional neighbors, such as the Czechs.
However, a group in Hungary has been less affected by the difficult economic situation: households with higher incomes (earning over HUF 430,000) felt less affected, with 25% saying they had kept everything the same. In comparison, only 15% of those with lower incomes (earning under HUF 270,000) said the same. Last year, these figures were much higher: close to double for both, with 44 and 33 percent, respectively.
About the Consumer Barometer survey:
* The survey was carried out in April 2023 by Kantar, on behalf of Publicis Groupe, among nearly 3,000 Hungarian, Czech, Polish, and Slovak consumers aged between 18 and 55. The survey examined consumer habits in 23 categories, including sweets, soft drinks, medicines, pet food, and coffee, to determine how high inflation and rising interest rates have changed consumption patterns.