This emerges from the current Sankt Martins Report 2024 from the Institute for Trade, Sales and Marketing at the Johannes Kepler University Linz.
While the purchasing reluctance of consumers in the middle and upper income segments is currently slowly waning, this is becoming firmer in the lower income segment. While in September 2023 27 percent of consumers in households with a monthly net income of less than 2,000 euros bought fewer retail goods, a year later the figure is even higher at 30 percent. However, if you look at the current phase of flattening inflation, the value should decline.
“Aftermaths massively noticeable”
“The aftermath of the inflation crisis is still particularly noticeable for the lower income quartile (up to 2,000 euros in monthly net income),” says the report. In comparison, purchasing reluctance in middle and upper income classes fell from 26 percent in the previous year to 18 percent.
In addition, 59 percent of Austrians in the lower income quartile continue to resort to cheaper retail goods in response to increased prices. With a value of 62 percent in the previous year, this purchasing behavior has hardly decreased despite lower inflation – in contrast to the higher income categories.
Save on electrical appliances and furniture
Particularly when it comes to retail spending on long-term needs, such as electrical appliances or furniture, lower incomes make the most of it: 54 percent save here, while it is only 35 percent in the middle and upper income segments. The results for the areas of vacation and leisure also show similar differences.
“Low-income households in particular are still suffering from the crisis,” is the summary. The analyzes would show that the inflation crisis is still hitting low-income households particularly hard, while consumer behavior in higher income groups is slowly easing.
The Sankt Martins Report 2024 is a special report on the occasion of St. Martin of Tours’ memorial day on November 11th, which is dedicated to the consumption and shopping behavior of Austrians with comparatively low household incomes. It shows differences to households in the middle and upper income segments.
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**Interview with Dr. Anna Fischer, Economic Analyst at the Institute for Trade, Sales and Marketing, Johannes Kepler University Linz**
**Editor:** Thank you for joining us today, Dr. Fischer. The Sankt Martins Report 2024 highlights significant disparities in consumer behavior across different income segments in Austria. What are the main findings regarding lower-income households?
**Dr. Fischer:** Thank you for having me. Yes, the report illustrates that lower-income households, specifically those earning less than 2,000 euros per month, are still feeling the strain of inflation quite acutely. We’ve observed that 30 percent of consumers in this category have reduced their retail purchases, and a substantial 59 percent are opting for cheaper retail goods as a direct response to rising prices.
**Editor:** That’s a striking contrast to the trends seen in middle and upper-income groups. Can you elaborate on what these higher income categories are experiencing?
**Dr. Fischer:** Certainly. In contrast, we see purchasing reluctance in middle and upper-income households decreasing significantly—from 26 percent last year down to just 18 percent. This suggests that as inflation stabilizes, these groups are regaining some purchasing power and confidence.
**Editor:** The report also points out that lower-income households are particularly cutting back on long-term purchases like electrical appliances and furniture. What factors are contributing to this behavior?
**Dr. Fischer:** Well, with the ongoing financial pressures, 54 percent of lower-income individuals are saving on long-term needs, compared to just 35 percent in higher income brackets. This indicates a clear prioritization of immediate needs over large investments, likely due to concerns about future financial stability.
**Editor:** In your opinion, what implications do these findings have for retailers and policymakers?
**Dr. Fischer:** Retailers will need to be more mindful of the pricing strategies they implement, particularly for essential goods. As for policymakers, this data suggests a need for targeted support measures for lower-income households, which are still significantly affected by the aftermath of the inflation crisis. Addressing these disparities is crucial for fostering a more equitable economic recovery.
**Editor:** Thank you, Dr. Fischer, for sharing these insights. It seems there’s still a long way to go for those in lower-income brackets.
**Dr. Fischer:** Indeed, thank you for shedding light on this important issue.
