How inflation is impacting spending and saving in Europe

World Savings Day is normally for taking stock of what we have, or putting more money aside for a rainy day. But this year feels a little different, with economies reeling from the effects of the COVID-19 pandemic, the ongoing war in Ukraine, supply chain issues, and a cost of living crisis. Saving has taken on a new sense of urgency in Europe and abroad. At the same time, rising costs have made saving difficult, as the price of everything from food to electronics to gas and electricity begins to tick up, thanks to inflation. 

With all of this happening, we wanted to know: How might inflation be affecting European consumers? We also had questions about how this compares across markets. Which countries have been most affected by price increases? And how are N26 customers across markets adapting their saving and spending habits, considering the cost of living crisis? 

To get answers, we analyzed the spending data and saving data of over 380,000 N26 consumers in five European markets (Spain, Germany, Austria, France, and Italy) between January to August, 2022¹. We uncovered where people are saving the most despite inflation, which country’s residents are still spending big on vacations and restaurants, and whose incomes are growing. Not only that, we also identified differences in how men and women save and spend. Read on to learn what we found out. 

The Eurozone ended 2021 with an annual inflation rate of 5.0%. Yet by August, 2022, it had ticked up to an astonishing 9.1%, and up further to 10% in September. In our analysis, which took place from January to August, 2022, the steepest jump occurred between February and March: from 5.9% up to 7.4%. This coincided with Russia’s invasion of Ukraine, which continues to have a massive humanitarian and economic impact in Europe and abroad. Because of how significant this event was—and continues to be—we’ve also compared two periods within this year’s data set as part of some of our analysis: January-February and March-August.

Of all the markets we studied, N26 customers in Spain have the highest savings ratio overall. Spanish customers set aside, on average, 6.6% of their income between January and August. This was followed by Germany, where customers saved 5.1% of their income on average. In France, customers had a shaky start to the year but are back in the black now on average, saving 0.1% of their income each month (roughly €3.55). Customers in Italy showed the largest decrease in their average savings, and their saving habits fluctuated the most—for the months of April, May, and August, they also spent more than they earned.

Government initiatives in Spain and Germany may have played a role in how much residents there have been able to save. For example, in late March, the Spanish government introduced a discount of 20 cents per liter on fuel for all drivers in Spain. Furthermore, the “Iberian Exception,” approved by the European Commission in June, capped the price of gas for power production, which reduced electricity bills considerably. Meanwhile, in Germany, the €9 ticket, a monthly pass valid for travel on public transit and regional trains throughout the country, might have given Germans more opportunity to save. 

Consistent with the gender wage gap, our data shows that men earn considerably more than women (on average) across all the countries studied—and by considerable, we mean roughly 39% more. Despite this, between January and August, women consistently saved more of their income—5.9% on average compared to 3.7% on average for men. In terms of actual euros, this averaged out to a monthly savings of €112.20 for women, while men saved €95.20 per month during the same period. This corresponds with last year’s findings during the same period—maybe indicating a broader, long-term trend. 

March was the top savings month for both men and women. Across countries, both women and men saved the most in absolute euros in March—€222.36 and €202.57 on average, respectively. This coincided with Russia’s invasion of Ukraine, but these findings were similar in 2021. So, despite the macroeconomic changes and geopolitical upheaval, a savings peak in March might be a larger annual trend. On the other hand, May was the worst saving month for women, who saved just 3.2% of their income on average, and men, saving a mere 0.1%. August was the second worst—which suggests that the so-called “shoulder season” months that bracket the summer holidays could be times when people are spending more than usual.

Of all the countries we studied, Spain experienced the highest inflation rates overall. But interestingly, N26 customers in Spain increased their savings, on average, from 4.6% (of their average income) in January and February to a whopping 7.2% from March onwards—a relative increase of 57.2%. This could mean that rising prices have encouraged Spanish customers to set more aside. Following the overall EU trend, Spanish users were also able to save the most in March—11.1% of their income, or €177.89 on average. 

Austrians also upped their savings substantially starting in March, setting aside up to 5.8% of their income on average between March and August. That’s compared to -2.9% in January and 1.44% in February. Saving ratios also increased in France from March on, where customers upped their savings from -2% to 0.8% of their average income—which might not seem like a lot, but it represents a relative increase of 140%. And when we looked more closely, we saw one outlier month: In January, French customers spent, on average, 4.5% more than they earned. That makes the August results even more striking: on average, users in France saved 2.1% of their income.

In every country we studied, incomes rose between March and August, compared to January and February—even if the increase was modest in some markets. Austrians enjoyed a significant boost, with incomes 17.7% higher on average than in January and February. This trend was mirrored, to a smaller extent, in Germany, where incomes in March–August were 6.9% higher on average than in January and February. 

Despite this, starting in March, Germans—while still big savers overall—were only able to save roughly half of what they’d saved in the first two months of the year. This gap exists both in terms of absolute euros and percentage of income. However, the introduction of the €9 ticket allowed Germans to save €119.30 for the month of June—almost €74 more than at their lowest savings point in May. 

In Italy, savings experienced the highest drop, according to our data. After managing to save 4% of their income in January-February, on average, this fell to just 0.6% in March-August. That represents a relative change of -84.2%. It’s worth noting, however, that average incomes increased 14.7%among Italian customers between March and August as compared to January and February—the second highest relative increase in our study, following Austria.

We also saw noteworthy trends when it came to spending. Signs of inflation were especially noticeable in the “food and groceries” and “transport and cars” categories. 

Of all spending categories, Austrians spent the most on food and groceries—and this increased by 8.6% on average (in total euros) in March-August, compared to January and February. Germans, on the other hand, spent an average of 9.2% more in total euros on food and groceries between March and August, compared to their spending in this category in the months prior. Italy saw the highest increase in total euros spent on food and groceries, at +15.6%. But the news isn’t all bad! In France, spending on food and groceries as a percentage of average income actually decreased by 8.5%, relative to their spending in January and February. This trend was also visible in Spain (albeit to a much smaller degree), with Spaniards spending 1.0% less of their average income in this category.  

Echoing supply-chain issues, spending on automotive and transport increased everywhere—especially in Germany and Italy. From March on, Italy showed the highest increase in spending on “transport and cars” of all countries studied, with an astonishing 53.5% increase in total euros spent compared to January and February. In Germany, spending increased by 39.9% on average—an extra €24.95 every month. Though still high at a 38% increase in total euros, France saw the smallest increase in the study. 

With all the upheaval, it’s perhaps no surprise that customers in some countries decided to blow off some steam. Germans, for example, spent more on bars and restaurants than any other country in our comparative data set. Their spending in this category lept from 3.2% of their average income in January and February to 4.3% from March onward—a 31.9% relative increase! Austrians followed closely with a 26.5% increase in spending here, from 3.6% to 4.6% of average income. In keeping with their fiscal responsibility this year, Spain spent the least in this category, at 9.3% of their incomes, on average.

Italians, on the other hand, set out to enjoy their lives this summer, increasing their travel budget to 5.6% of their income (€75.95 each month, on average) from March-August. Since Italian customers were only spending €36.69 monthly on travel in January-February, that’s a relative increase of 107% (in total euros). Spain, meanwhile, increased their travel spending by 68.8% (in total euros) between January-February and March-August. And German customers reported a more modest, but nevertheless sizable, holiday budget increase, going up 53.9% (in total euros spent) during the same period.  

N26 is committed to providing our customers with the tools and motivation they need to reach their savings goals—for 2022 and beyond. With our online bank account, not only can you set daily spending limits, you’ll also receive push notifications right after each transaction to help you keep track of your budgeting goals. And by upgrading to an N26 Smart, You, or Metal account, you’ll have access to top features like Spaces sub-accounts—virtual piggy banks to help you save for each of your unique goals. 

Plus, you can find more savings and budgeting ideas elsewhere in our blog, where we discuss popular strategies like the 50-30-20 rule. Enjoy!

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¹ The study is based on N26’s analysis of the anonymised spending data and saving data of over 380,000 N26 customers in Europe in the period of January to August 2022. ‘Income’ is defined as all transfers going into the survey’s participants’ main bank account. ‘Spending’ is defined as money transfers going out of the survey’s participants’ main bank account. N26 categorizes these outgoing transfers according to their respective vendor type, to allow customers to keep track of their spending and budget with N26 Insights. For this analysis, the authors assessed the monthly volume of spending in several N26 Insights categories to draw conclusions on spending behavior. “Amount Saved” or “saving” is defined as the difference between ‘Income’ and ‘Spending.’