Last year, Czechs drastically reduced their shopping. Full shopping malls and restaurants before Christmas were apparently just an illusion, the fastest working poor.
The consumption of Czech households in the third quarter of last year, i.e. from July to September, in fact, it has historically failed. In real terms – i.e. after taking inflation into account – people in the Czech Republic were shopping 7.8 percent less goods and services per person than in the same period in 2021. This is the second most significant year-on-year drop since 2005, for which period the Czech Statistical Office publishes the given time series.
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More, albeit slightly, by 7.9 percent, real consumption fell year-on-year only in the period from April to June 2020. At that time, however, the Czechia was struggling with the first wave of the covid-19 pandemicso a significant part of brick-and-mortar stores, but also restaurants, were closed for health reasons.
Last year, in the third quarter, real consumption fell dramatically, despite the fact that shops were already fully open. The result is all the more serious. It confirms that judging the state of the economy and the willingness of consumers to spend only from the perspective of “full shopping centers and restaurants” can be quite misleading.
The recent pre-Christmas period also optically filled many shops and restaurants, however, the question still remains as to how much people actually spent in them. Today’s published figures for last year’s third quarter indicate that we can expect a historic drop in consumption in the last quarter of last year as well.
Significant the decrease in real consumption is mainly due to a noticeable decrease in real monthly income in per capita terms, i.e. financial income that takes inflation into account. In this statement, income per person decreased year-on-year by 5.2 percent. This is the second sharpest drop in real income for the entire period again since 2005.
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Although salaries, wages and pensions grew nominally (numerically) year-on-year last summer, but inflation was so high that the income of people in the Czech Republic was significantly reduced in real terms. Even more significantly, by 10.7 percent, i.e. the most ever in the entire history of the given time series since 2005, the monthly income from employment per person fell in year-on-year terms. People who have all their income from employment, and not from pensions or other benefits, or from renting real estate or holding shares, have thus in real terms suffered even more than the population as a whole.
To a relatively sensitive one decline in real incomes, especially those from employment, occurred already in the first half of last year. However, this decline at that time has not yet manifested itself in a drop in real consumption. It only happens in the third quarter of last year.
It seems during the first half of last year, people in the Czech Republic were still able to increase their real consumption despite the reduction in real income, thanks to savings from the times of the pandemic. They accumulated these due to prudent savings in fear of the coming of even worse times, but also due to the described simple impossibility to shop in a whole range of brick-and-mortar stores, or perhaps due to difficulties or practical impossibility – again caused by the pandemic and related restrictions here and abroad – to travel at leisure or take a vacation.