If you’re looking for a quick way to turn your shopping cart into a roulette wheel, here it is: real wages down, consumer credit up again. The Italian art of making ends meet has been renewed: since we cannot raise wages more than inflation, let’s try to increase… the installments. Brilliant. Until interest came knocking at the door with the subtlety of a medieval tax collector.
These numbers are not romantic. The OECD takes a picture of our race treadmill: we are moving forward, but the recording is going faster. After prices peaked, in many countries real wages have started to improve, but in Italy the recovery has been slow and the cumulative losses from 2021 are still large (7.5% reduction). The OECD itself indicates that nominal increases in the region are among the slowest among developed countries and recently, with inflation falling, they have promised a “modest” recovery: in other words, we are not yet back to where we were before the turmoil occurred.
Meanwhile, other curves return to high levels: i loan. The ABI reports that family loans have started to grow again and interest rates, although down from their highs, remain non-symbolic. Actually no present, but it’s enough to convince those suffering from liquidity apnea to take a breath with a banking air hose.
Here’s the paradox: When wages are in trouble, installments seem to be a shortcut to maintaining living standards. However, from a macro perspective, this is fuel for purchasing power that is already starting to burn. Because family debt works like a deferred tax: today you buy, tomorrow you pay more interest. If real income does not recover enough, debt repayment becomes an adverse effect that tightens current spending each month. This is an anti-multiplier: smaller margin for future consumption, less savings, greater vulnerability to new price shocks. And no, the “three something” fare is not free.
Someone will say: “But wages have recovered in 2024”. True, it’s a shame that some of the profits are lost in the wilderness of taxes and fees. The net result in the envelope doesn’t match the pace of a press release, and the feeling within the family remains that of chasing the end of the month with tongues hanging out.
The risks, then, are classic Italian risks: privatize macro adjustments. The statistics improve slightly, the deficit narrows, interest rates drop a few decimal places, and we convince ourselves that everything is fine. In fact, without a serious real wage recovery—i.e. more productivity, contracts arriving on time, and less value-draining income—increased credit to families becomes a hole in the umbrella: it cheats you until it actually rains.
What should be done to prevent installments from becoming a trap? Before signing, do a home installment “stress test” by adding at least 1-1.5 points to the assumed rate and check that the balance is still sufficient. On consumer credit, you’d prefer a short or renegotiated term if the APR is a product of the high interest rate era, because it’s the total cost that’s taken into account, not the “comfortable” installments. Building a liquidity cushion equal to at least three to six months’ living costs before doubling the installments, this is real anti-inflation when wages do not recover.
The truth is simple: credit is a tool, not a substitute for wages. If we use it to close the gap in incomes that are too low, we will have a house full of appliances in installments and more and more empty refrigerators. A shortcut to debt, with low real wages, will lead to weakening purchasing power in the future. And to richer banks.
