Czech household spending experienced a notable surge of nearly 14% in 2022, reflecting increased consumer activity. However, when adjusted for inflation, the reality becomes apparent: Czechs were getting less for their money. Statisticians have confirmed what many Czech citizens experienced firsthand over the past year—while they were spending more, the tangible goods they were taking home were dwindling.

In 2022, the annual consumer spending per person in Czech households reached CZK 180,773, equivalent to CZK 15,064 per person per month, marking a substantial 13.7% increase compared to the previous year. However, this apparent financial boost was significantly eroded by a staggering 15.1% price increase in 2022. As a result, real household spending, when adjusted for inflation, witnessed a concerning decline of 1.2%.

The breakdown of household expenses in 2022 revealed that the most substantial long-term costs were related to housing and energy, constituting 23.4% of overall spending. Following closely behind were expenditures on food and non-alcoholic beverages, accounting for 19.4% of household budgets. Notably, education and health represented the smallest shares of household expenditures, thanks to the availability of free or subsidized services in these areas compared to many other countries.

The surge in prices had a profound impact on household spending patterns. Energy costs, for instance, escalated by a daunting 15.5% in 2022, primarily driven by surges in electricity, gas, and coal expenses. Additionally, fuel expenditures surged by an astonishing 33.5% during the same year.

Táňa Dvornáková, the head of the Social Surveys Department at the Czech Statistical Office, observed that households gradually resumed spending on activities like recreation, culture, sports, and dining out in 2022 after curtailing such expenditures due to pandemic-related restrictions.

However, the financial challenges facing Czech households have extended into 2023, as evidenced by the country’s retail trade data. Retail sales have been on a persistent decline for over a year, a stark contrast to the period before the global crisis.

June 2023 data reveals a concerning trend, with Czechs purchasing nearly 5% fewer goods compared to June 2019, marking one of the most substantial declines in Europe. Only Italians reported a slightly smaller decline at 3.6%. In contrast, consumption in other European countries has either remained stagnant or experienced growth.

The food category, in particular, witnessed a significant reduction in consumption among Czechs, with purchases declining by more than a tenth. High prices have been a primary driver of this unique trend in Europe, posing a substantial risk to low-income families who allocate a significant portion of their budgets to food expenses and are now forced to make cuts on essential purchases, further emphasizing the need for measures to address the ongoing economic challenges faced by Czech households.

Article by Prague Forum