A recent Portuguese survey reveals that 88% of the population feel a loss of purchasing power due to inflation, with 39% describing it as a significant impact on their lives. Facing rising prices, approximately two-thirds of respondents have had to forgo certain activities for economic reasons, a situation affecting women (73%) more than men (59%). Expert Natália Nunes from DECO PROteste highlights that this loss of purchasing power is the primary driver of financial difficulties for families, superseding traditional causes like unemployment or illness. The survey indicates that lower-income households (up to €2,000 monthly) feel the impact of price increases most acutely, while this perception gradually diminishes in higher income brackets.

Despite these challenges, Portuguese citizens tend to plan for the future when receiving unexpected funds. The survey found that 40% of respondents would prefer to invest or save €5,000 if it were to appear in their bank account overnight. This preference is markedly higher among younger demographics, with 54% of Generation Z and 44% of Millennials choosing this option, contrasting with older generations like Generation X (31%) and Baby Boomers (29%), who are divided between paying off debt or saving for "unexpected expenses." Nunes attributes this trend among the youth to increased financial literacy and easier access to information via the internet, which reduces the fear of risk.

On the other hand, the majority of Portuguese prefer purchasing new products, with over 90% of participants indicating a preference for new items in categories such as home appliances or clothing. However, there's a slight increase in demand for used goods, particularly among young people selling their items online. Conversely, older generations tend to donate unused items or send them for recycling. In the automotive market, 61% prefer buying used cars, with the exception of higher-income households who favour new vehicles.

Key Indicators

The preference of young people for saving and investing signals a shift in financial literacy, potentially influencing the savings and investment sectors in the future.
Inflation and declining purchasing power are leading indicators for potential shifts in consumer spending patterns.
Data suggests younger generations are more inclined to adopt and take risks with digital financial tools, creating opportunities for fintech companies.

Regional Perspective

This survey highlights a unique financial landscape in Portugal, where concerns about inflation intertwine with responsible financial behaviours, particularly among the youth. The preference of Generation Z and Millennials for saving and investing, even amidst economic pressures, demonstrates a willingness to adopt long-term financial strategies. This could drive innovation in youth-focused banking services and investment products within Portugal.

Analysis

The preference of Portuguese people, particularly the youth, for saving and investing upon receiving unexpected funds indicates a growing financial awareness and a desire to build a more stable financial future. The increasing financial literacy among young people, fueled by easy access to online information, encourages them to make informed financial decisions. In the long term, this trend could lead to higher savings and investment rates in Portugal, boosting economic growth and opening new avenues for the financial sector. However, the ongoing impact of inflation on purchasing power remains a challenge, prompting companies and financial institutions to offer innovative solutions to support consumers in effectively managing their finances.