Much of the savings goes to face rising prices

Inflation, despite showing signs of moderation in recent months, continues to be a challenge for the Peruvian economy, even leading them to resort to their savings to face this situation. Thus, people would be allocating a greater part of their deposits from their salary account to consumption.

According to a report made by Scotiabank, personal savings grew 5% in May. The result contrasts with the 3.3% drop in the same month of 2022 and exceeds the 4.1% growth recorded throughout 2022.

In terms of amounts, in the last 12 months, people’s savings had a positive flow of S/9,000 million, which represents a stock of S/188,000 million as of May, measured at a constant exchange rate, which is considerably higher than the levels prior to the pandemic, which stood at S/163,000 million.

However, the data reveals that regulated savings, made up of deposits in the salary account and deposits CTShas experienced a contraction of 12.9% until the fifth month of the year.

According to the investigation, the negative result is mainly driven by the decrease in the balance of savings deposits, which fell by -11.8%.

This, in the opinion of the Scotiabank Economic Studies Department, is due, in part, to the fact that people would be redirecting their funds towards consumption. This is due to a loss of its capacity acquisitive caused by high inflation levels.

The economist Juan Carlos Odar supports this statement; however, he highlights that this situation is perceived as transitory by people.

“There is a drop in income, but that drop is supposed to be temporary. If it would not be considered so, then they would have to be adjusted (the bills) and what would fall is consumption”, he comments.

Peruvians demand the provision of their pension savings, but Congressman Barbarán considered that the only solution to this evil is the reform of the system. Photo: diffusion

In addition, the director of Phase Consultores maintains that the use of these savings is boosting domestic demand and could contribute to growth in the second half of this year.

According to odarthe people who are using their savings for consume they belong to the middle economic segments, that is, those who have the capacity to save and possibly have no other source of income.

It also points out that these expenses are mainly directed towards non-durable goods, such as food, transportation and other basic necessities.
As for inflation, although a correction is underway, its reduction would be slower due to the growth in demand driven by the use of savings, considers Odar.

On the other hand, it should be noted that the contraction of regulated savings in May was also influenced by the balance of deposits in CTS accounts, which contracted by 24.8%. The accumulated amount as of December 2020 was S/17,000 million, while the amount registered as of May 2023 was only S/8,100.

Discretionary savings grew more than 60% in May

Discretionary savings, made up of term deposits, mutual funds and endless pension funds, increased 60.4% as of May 2023, after registering an increase of 41.2% during 2022, according to Scotiabank.

The deposits personal loans grew up to 105.8% as of May, reaching a balance of S/46.9 billion.

On the other hand, the assets managed by mutual funds for natural persons have been recovering during 2023 until reaching a 8.5% growth.

Lastly, endless pension funds, which represent only 0.9% of total savings, have been contracting for 15 consecutive months and accumulate a balance of S/1,782 million.

The word

Juan Carlos Odar, Economist at Phase Consultores

“The people who are spending are those who have the capacity to save and probably those who have no other source of income. We would be talking about middle segments”.

Saving behavior in the last 12 months