How much purchasing power are we going to lose due to rising prices? It is the question that most families ask themselves in Spain, where the price of food and fuel continues to increase. Inflation is out of control and has become the epicenter of the economic debate. In fact, this past month we have reached our highest level since September 1992, almost three decades ago.
With a bottleneck in the supply chain in Europe, the extra cost in the shopping cart, filling the car tank, and the electricity bill are the new headaches of citizens, who live with the worry of a loss of your purchasing power.
The data. Inflation has risen this November by 5.6% compared to last year. This is two tenths more than in October, and its highest level in almost 30 years. The data published by the National Institute of Statistics (INE) marks new annual highs for inflation in Spain, which has grown without interruption since March. Why? Mainly due to the increases in food prices and, to a lesser extent, fuel for vehicles.
Core inflation, which does not take into account the prices of energy and fresh food – the most volatile elements – has also risen, going from 1.4% to 1.7%.
Loss of purchasing power. The rise in prices puts the purchasing power of workers on the ropes, who see prices rise exponentially, already settled above 5%, while the rise in wages does not reach that level. According to the last Collective Bargaining Bulletin from the Ministry of Labor, it remains at 1.5% after 1.8% in 2020. The gap would then be almost four points. And consumers have already detected that onslaught when they go to supermarkets, with significant increases in products such as oil.
This gap is precisely one of the causes of the conflict that has been experienced in Cádiz, where the metal sector has gone on strike due to the negotiation of an agreement that did not include this price increase.
The inflationary phenomenon is global. But the phenomenon is not unique to Spain. Prices rose 6.2% in the US in October, their biggest increase in more than three decades. In Germany, they climbed to 4.6% that month, and are hovering around the highest levels since the fall of the Wall. Central banks repeat the mantra that it is transitory. And while, highly indebted countries, such as Spain, fear that the withdrawal of monetary stimuli will accelerate to avoid overheating and thus make their financing more expensive in the markets.
Is it more expensive to fill the fridge? Definitely. Food and non-alcoholic beverages are among the groups that are experiencing the greatest increases, with a cumulative rate of 1.7% after having touched 2% in August and not having registered depreciations in the entire pandemic period. To give you an idea, these indices reflect that last month 105.4 euros were necessary to acquire the same shopping basket, which cost one hundred in October 2020.
Specifically, today it is 5% more expensive to do it than two months ago. The products most affected by this rise are mainly fruits and vegetables, which in a few days have multiplied their price by nine. Something similar has happened with other basic goods such as bread. Palm oil has risen 75% in the last year; sugar, 10%; corn and other cereals, 25%.
And how much are household expenses going up? Living in a house, keeping it at a decent temperature and using personal hygiene and domestic cleaning products costs 20.5% more than a year ago, according to INE data. The key factor behind this increase is found in energy, with an increase of 62.8% compared to last year in the case of electricity and another of 16.5% for gas. The rise in electricity more than doubles the previous peak of 26% recorded in early 2017.
Supply chain problems affect us. At the moment, they remain in the form of bottlenecks in the ports due to the lack of truckers and a lack of chips that is forcing car factories to make stoppages due to delays in their arrival of up to 25 weeks and keeps almost 40,000 employees of the Volkswagen, Stellantis, Renault, Ford and Mercedes factories in Spain.
The World Trade Organization already postulates that this global bottleneck can still drag on for months. The prices of containers that travel on the ships remain historically at sky-high thresholds, and orders for new ships will still take some time to be ready. The same happens with oil and gas, penalized in recent days for fear of the new strain, but still accumulating significant increases so far this year. And well, the arrival of the cold has pushed the price of electricity to its most expensive week in history. They don’t look like easy times.
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