Consumer trends – electricity prices and ‘anxiety-induced saving’

The shock caused by the Covid-19 pandemic and the high electricity prices in Southern Norway dominated the conversation between Paal Fure, CEO of Dentsu Norway and Northern Europe, Magnus Solstad, senior analyst at Kredinor, Elisabeth Holvik and Håkon Haugsbø, the webinar’s host.

“Electricity prices and the uncertainty people have experienced during the pandemic make them want to save and generally be more careful. This could last for at least a year. In this context, an interest rate increase is irrelevant; what counts is the price of electricity. How vulnerable are we to consistently higher electricity prices? There is a global shortage of energy. We could well see a lengthy period of high electricity prices,” says Elisabeth Holvik, chief economist at Sparebank1.

Anxiety and uncertainty

Holvik believes the pandemic has reminded consumers that the world is becoming increasingly insecure, prompting them to save more.

“We are seeing a tendency towards mild anxiety-induced saving among consumers. The term comes from Germany, where people are more concerned about self-sufficiency than they are in Norway. I won’t exaggerate, we’re not talking about severe anxiety, but the apprehension experienced during the pandemic period has definitely not gone away. A strong focus on electricity prices, a potential tax rise and higher interest rates all serve to reinforce this apprehension. People will choose to maintain a larger financial buffer,” says Holvik.

Won’t cry wolf

Kredinor’s senior analysist Magnus Solstad has the largest database of debt collection cases in Norway at his fingertips. The debt collection statistics give him no grounds to infer either a consumer spending bonanza or a debt crisis.

“Developments in the third quarter have continued more or less as before during the pandemic. We see a marginal increase in August and September, although we are reluctant to declare a crisis just yet. Unfortunately, I find that rather too many actors are crying wolf prematurely. There is relatively little movement in the figures, which probably leans towards a normal situation,” says Solstad.

Solstad emphasises the fact that it will take a while before high electricity prices impact the debt collection figures.
“When the bill arrives at your online bank, it takes at least 60 days before it turns up as a case for debt collection. In any case, electricity bills are not a big problem in the summer, when consumption is generally low. But if today’s price level lasts through the late autumn and winter, the price of electricity will definitely have a fairly hefty impact on the debt collection situation,” says Solstad.

A «wake up call»

Dentsu Norway’s Paal Fure is concerned about what the pandemic has done to us as consumers. He believes the crisis has accelerated a number of social trends.

“People are now paying more attention to risk than before the pandemic. We have been a carefree society, but the pandemic changed everyone’s perception of their own lives and finances. I think we as people and consumers have gained a better and more realistic understanding of the situation. We are more vulnerable than we thought. In this way, the pandemic has acted as a ‘wake-up call’ for society – locally, nationally and internationally,” says Fure.