Household savings rate hits new record low

Spain's household savings rate declined to a new record low last year as rampant unemployment and the loss of spending power due to inflation and wage cuts forced families to dip into their piggy banks to make ends meet.

According to figures released Tuesday by the National Statistics Institute (INE), households set aside 8.2 percent of their disposal income last year, the lowest rate since the INE began compiling the series in 2000. The figure was down 2.8 points from a year earlier.

The INE said disposable income in the fourth quarter declined 4.2 percent from the same period a year earlier, a fall of 7.835 billion euros to 176.766 billion. Wages in the period declined 8.5 percent, with was barely offset by slight increases in income from other sources such as interest rates and deposits.

Also as a reflection of the fact that over a quarter of the working population is now out of a job, benefits received by households rose 1.0 percent, while social contributions declined by 7.7 percent and taxes fell 1.6 percent.

The savings rate fell despite ongoing belt-tightening by families. The INE said household spending in the fourth quarter fell 0.6 percent from a year earlier. As a result, the amount saved dropped by 24.7 percent from a year earlier to 22.547 billion euros.