Purchasing power up 1.4% under current government, but not for low-income earners
Despite the high inflation of recent years, the purchasing power of the average Belgian has increased by 1.4 per cent during the entire term of the current federal government, a study by economists at UGent showed on Thursday. But those with the lowest incomes saw their purchasing power decline instead.
The three economists behind the study used bank transaction data from 900,000 Belgian households for their research. Their work showed that the average Belgian saw a 1.4 per cent increase in purchasing power between October 2020 and March 2024.
While purchasing power rose in 2021 and 2022, it fell by 1.6 per cent between March 2023 and March 2024. Inflation was significantly overestimated in 2021 and 2022, resulting in an "artificial increase in purchasing power". From the beginning of 2023, inflation was underestimated, leading to the opposite effect.
Anti-political sentiment
According to the study, the increase in purchasing power was mainly felt by people with medium and high incomes. People with lower incomes actually saw their purchasing power fall. For the 20 per cent with the lowest income, purchasing power fell by 2.7 per cent.
These findings, say the economists, explain why many people in surveys are worried about their purchasing power and "could be an important factor in the growing anti-political sentiment and the success of radical parties".
Another UGent study found that the wealth of the average Belgian household is 249,301 euros, well above the European median of 123,500 euros. The amount refers to net wealth, i.e. total assets minus debts.
Real estate and savings accounts
More than 80 per cent of the average Belgian household's wealth is in property, with the family home accounting for more than 58 per cent. Belgians are also strong savers, according to the study, with almost 10 per cent of total wealth held in savings accounts.
The average Belgian has 25,984 euros in 'cash'. Around 77 per cent of this is held in savings accounts. Remarkably, around 40 per cent of Belgian households have more than 12 times their net income in their savings account.
According to the report, it takes a fortune of 4.7 million euros to be among the one per cent richest people in Belgium. The median wealth of the richest one per cent is 5.9 million euros.
© BELGA PHOTO
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