Despite the fact that salaries have remained flat in 2011 as compared to the year before, a part of the population have found it possible to purchase durable goods and spend money on home improvement, suggests the Central Statistical Bureau’s retail turnover data which shows that 2011 has seen a 6.2% year-on-year increase in the turnover of non-edible items.
Swedbank’s Institute of Private Finances attributes this to both a drop in prices for certain categories of goods (the prices of electrical appliances have dipped by 4.2%, while the prices of audio and video products have decreased by 13.9%) and the low motivation of households to create savings. The pan-Baltic study conducted last year by Swedbank’s Institute of Private Finances revealed that Latvia’s population has the lowest savings rate – only 46% members of the public in Latvia said they had at least some savings. At the same time, 18% of people who had no savings said they don’t want to create any and another 28% did not have an opinion on this matter.
Likewise, the statistics suggest that people, instead of buying a new home, prefer investing their savings in refurbishing and improving their existing homes. This is evident in both the retail data and the results of the survey conducted by Swedbank’s Institute of Private Finances at the end of the last year, which showed that the number of households, who indicate that their expenditure on home refurbishments have been higher in 2011 as compared to the year before, has risen from 19% to 30% over the year.
Ieva Use, the Director of Swedbank’s Institute of Private Finances, believes that people should, along with making somewhat larger purchases, still take care of creating a financial safety net for themselves by putting aside some of their income and, when it’s done, consider the alternative of investing money in early repayment of their loans – this makes great economic sense for families as it allows saving on interest payments. “People who have savings can handle unexpected situations much better. This is particularly important in the light of the fact that there is still a lot of uncertainty in global economy and rapid growth which would secure steady jobs and higher salaries is not expected yet,” commentsIeva Use.
