The withdrawal of price containment measures implemented by the government until the end of 2024 – reducing VAT on food and electricity – to mitigate the effects of the war in Ukraine on the economy, has affected inflation in Spain. … Which is gradually accelerating in its rise and moving further and further away from the 2% that the European Central Bank considers a safe number. Added to this are a host of other reasons, such as the upward impact on the electricity bill – partly due to the use of gas stations to avoid another power outage – and the staggering rise in some food items. Overall, the CPI in October reached 3.1%, according to the final reading published today by the National Institute of Statistics, which confirms data already presented at the end of last month.
As previously presented, this figure is far from what the European supervisor recommends. In fact, this is the highest in more than a year and a half, and what is even more worrying is that Spain’s CPI is almost one point away from the eurozone average (2.1% in October, according to Eurostat).
Hence, it is worth asking what is happening in Spain to make prices rise more than in the rest of the single currency countries and exacerbate the loss of purchasing power for the Spanish people. Because we must not forget that the problem with these monthly promotions is that they increase the accumulated inflation, which has already exceeded 22% since the pandemic, compared to salaries, which are not advancing at the same pace. Everything loses value when there is inflation, from salaries to money in piggy banks or bank deposits.
According to statistics, the increase is mainly explained by higher electricity prices, which have become 18% more expensive per month – compared to October 2024 – and have accumulated an 11% increase so far this year. If we take the fundamental data, which is not unimportant because it excludes the prices of the most volatile items – energy and unprocessed food – and thus allows us to know the “structural” development of prices, the CPI in the tenth month of the year stands at 2.5%, which is not small.
Among all the items that may negatively affect the CPI, we must highlight clothes and the shopping basket, two items that will be absolutely essential for Christmas. Given the beginning of the fall and winter season, which is the month of August for major fashion brands, the “Clothes and Shoes” category in the tenth month of the year showed an increase of 8.2%, which added 0.287 points to the general consumer price index, according to statistics.
(there will be an extension)
About The Author
