Household consumption in Slovenia decreased sharply in 2020, while disposable income continued to grow, reaching a record high level, the statistics office said on May 26.

The trend happened as the coronavirus pandemic and government measures to mitigate its social and economic consequences affected different areas of the life of households, including consumption habits.

Household consumption in Slovenia increased over the 2014–2019 period, but in 2020 household final consumption expenditure fell by an annual 10.3% or €2.6bn in nominal terms, the statistics office said.

This was the largest drop ever and the first after 2013. A key reduction factor is measures to stop the spread of the virus, as due to the closure households had to postpone purchases of non-essential and durable goods and services that they originally intended to purchase during this period.

Households also reduced their consumption due to the uncertain development of the labour market especially in the first wave of the pandemic.

While consumption dropped significantly, households’ savings increased sharply in 2020. The gross household saving rate, which represents a share of savings in gross disposable income, amounted to 25.1% compared to the long-term average from 2008 to 2020 of 13.6%.

It also increased by 11.7 percentage points compared to 2019. The increase in gross household saving rate throughout 2020 was the largest increase so far.

In 2020, household disposable income in Slovenia also continued to grow.

Household consumption and saving depend to a large extent on their disposable income, which last year increased by 3.8% year on year in nominal terms  or €1.1bn, mainly as a result of extensive general government transfers to mitigate the effects of the epidemic. 

The most important component of gross disposable income is compensation of employees (income from work).

All other components maintained a positive contribution to the growth of gross disposable income with the exception of neutral effect of gross operating surplus and mixed income. The largest positive impact came from net social transfers, net property income and other current transfers and compensation of employees.