Consumer Price Index: how rising inflation affects Spain | Economy and business
Prices in Spain rose 5.5% in November, according to data released on Wednesday by the National Institute of Statistics (INE). Although this is a tenth less than expected, the big picture remains the same: Inflation is at its highest level in 29 years, and it is rising faster than wages can keep up.
November’s figure is the highest of the year, exceeding the 5.4% recorded in October. It also had a significant impact on the Consumer Price Index (CPI), particularly in categories such as housing (+ 16.8%), which includes the cost of electricity, gas and the water ; transport (+ 13.5%), hard hit by the rise in fuel prices; food and non-alcoholic drinks (+ 3.3%) and hotels, cafes and restaurants (+ 2.5%).
At the same time, core inflation, which does not take into account the cost of energy or fresh food – the most volatile items – fell 1.7% in November, from 1.4% in October. Of Spain’s 17 regions, the Canary Islands experienced the highest price spikes in November in annual terms, while Asturias was the only region to record a decline.
INE’s announcement comes at an important business time as the country heads into the Christmas season, when sales are higher than at any other time of the year. It also coincides with soaring energy prices: the cost rose to € 304 per megawatt hour (MWh) on Wednesday, the highest on record. The energy crisis is being felt across Europe, with prices exceeding the € 300 mark in many countries, including France (€ 346 per MWh), Italy (€ 342 per MWh), Switzerland (328 € per MWh) and Austria (€ 312 per MWh).
In response to the hike, the Spanish government, led by a coalition between the Socialist Party (PSOE) and its junior partner Unidas Podemos, announced that it was working on a new round of measures to mitigate the impact of the outbreak. costs on households and small and medium-sized businesses. Finance Minister María Jesús Montero told Spain’s lower house, the Congress of Deputies, on Wednesday that the government would extend for four months tax cuts introduced in September to cut electricity prices.
Despite this, at least four in ten Spanish households (almost 10 million) will pay more for electricity this year than in 2018, despite promises to the contrary by Prime Minister Pedro Sánchez in an interview with EL PAÍS on September 5.
Also on Wednesday, the Spanish National Road Transport Committee (CNTC) held a demonstration in the streets of Madrid to call for action to address the crisis in the sector, which is struggling to cope with the surge in traffic. fuel price. The CNTC has called a three-day strike, between December 20 and 22, which the government hopes to end through negotiations.
Here’s a look at how inflation is affecting other sectors, according to the INE report.
Food and non-alcoholic drinks. It was the category that contributed the most to the rise in the CPI in November. The price of all meat products has increased, with the exception of pork, which has fallen slightly. The cost of lamb and goat meat jumped 6.9% from October, while fish, seafood, milk, cheese, eggs, bread and cereals all increased. also increased, but at a lower rate. Compared to last year’s figures, there is a sharp increase in products such as olive oil (+ 25.5%), lamb and goat meat (+ 15%), non-alcoholic beverages. alcoholic beverages (+ 10.5%), pasta and couscous (+ 10.3%), baby food (+ 7.2%) and fresh and chilled fruit (+ 6%).
Transport. The cost of gasoline and diesel fuel increased 1.9% in November from October. Compared with November 2020, gasoline and diesel prices jumped 29.4% and 32.8% respectively. Rising fuel costs, which in the case of Brent Crude soared 44%, pushed up prices at gas stations.
Hotels, cafes and restaurants. The cost of hotels, hostels and other types of accommodation in November increased 24.2% compared to the same month in 2020. As for restaurants and cafes, prices jumped 0.3% compared to to October and 1.8% from the start. of the year.
Lodging. The cost of electricity in November fell 6.8% compared to October, but remains 46.7% higher than in November 2020. The price of natural gas fell compared to last month but was up 11.3% from a year ago, while liquids and hydrocarbons, such as butane gas and propane gas, saw a monthly increase of 2.4% and an annual peak of 33.6%. The cost of household furniture also increased 4.7% year on year.
Experts are convinced, however, that inflation will start to fall next year. “There is light at the end of the tunnel: inflation is here to stay, but it will be significantly lower in 2022 and the following years than in 2021”, said Ignacio de la Torre, chief economist of the Arcano financial company.
Nieves Benito, head of basic research in the asset management division of Spanish lender Santander, Santander AM, added that the current situation is largely due to the impact of the coronavirus pandemic.
“In 2021, the lifting of [coronavirus] restrictions, the return of mobility and the reactivation of the economy created a perfect storm in which there was a significant imbalance between supply and demand, ”she explained. “This has led to unprecedented tension in the global supply chain and unprecedented record levels of inflation over the past decades. We expect growth to slow, while remaining above the pre-Covid average. This, in addition to the gradual adjustment of the supply chain, should lead to a slow decline in inflationary pressures. “