In Spain as a whole, the CPI rose 1.2% in December compared to the previous month and raised its interannual rate to 6.5%
The price escalation that was first noticed in the electricity bill is already hitting other segments such as housing and food, making the shopping basket more expensive and significantly reducing the purchasing power of wages. After soaring 5.5% in November in international terms, inflation climbed to 6.5% in the last month of the year, according to the definitive data published yesterday by the National Institute of Statistics (INE). The indicator -which leaves an average advance of 3.08% of prices in 2021, the highest in ten years- is two tenths lower than the 6.7% of the advanced data. But even so, it is necessary to go back to May 1992 to find a higher rise in prices in Spain. In monthly rate, the CPI rose to 1.2% in December. And core inflation (without unprocessed food or energy products) increased four tenths, to 2.1%.
The CPI for the Region rose by 1% last December compared to the previous month, so that the accumulated interannual figure stood at 6.3%.
Specifically, the prices of clothing and footwear, plus alcoholic beverages and tobacco, fell in Murcia by 3.4% and 0.8% monthly, respectively, while those of transport and telecommunications fell by 1.1% and 0.1 %.
In contrast, the prices of food and juices rose in the Region (1.6%); housing (6.8%); tableware (0.5%); medicines (0.9%); culture and leisure (0.8%) and hospitality (0.4%). The teaching ones were frozen.
The rebound in electricity had a special impact on this upward spiral. Something expected if one takes into account that energy prices in the wholesale market reached maximums above 300 euros per megawatt hour for several consecutive days, making December the most expensive month in history.
As detailed by the INE, electricity prices shot up 72% year-on-year (taking households with a regulated tariff or PVPC as a reference). A figure that could have been higher, 96.8%, were it not for the reduction in taxes applied by the Government on the final bill.
upward pressure
But the light is not the only thing that has put pressure on the indicator. “The increase in inflation in December had a very generalized origin, which indicates that a transfer of the higher production costs to final consumer prices is taking place,” says María Jesús Fernández, senior economist at Funcas.
The data thus certify it at the national level. Factors such as bottlenecks or the scarcity of some raw materials have also had a full impact on the prices of, for example, housing, with an annual variation of 23% in the period. Similarly, food and non-alcoholic beverages raised their rate to 5%. Never since September 2008, in the midst of the financial crisis, have they become so expensive.
One of the most affected products has been olive oil with a rise of 24.5%, followed by sheep meat, which rose by 21.8%. The escalation was also noted in the price of beef and poultry with increases of 6% in annual terms, as well as fresh and frozen fish. Other basic products in the shopping basket, such as eggs, rose by 6.2%. Milk rose 4.5% and fresh fruit 9%. The rise in prices is also reaching the hospitality sector, with an increase of six tenths at the end of the year, up to 3.1%, for hotels, cafes and restaurants.
This high inflation, accelerated since last March, is not exclusive to Spain. The rise in prices has run amok around the world, putting in check the discourse of the central banks that until very recently defended tooth and nail that the situation was “temporary”. But reality has forced them to back down.
In the United States, with the CPI also shooting up to 7%, no one doubts that the Federal Reserve (Fed) will apply the first interest rate hike in March, which will be followed by two or three more.
On this side of the Atlantic, pressure is also increasing for the European Central Bank (ECB) and some voices suggest that the body will have to make a move before the end of the year. Its president, Christine Lagarde, rules out a rate hike this year. However, yesterday he qualified his speech to ensure that “we will take the necessary measures to guarantee that we meet our objective of 2% in the medium term.”
There are analysts who see the first rate hike in Europe as inevitable at the end of 2022, with current inflation in the euro zone at 5%, the highest since 1997. Overcoming the 2% barrier implies an impact on the purchasing power of households . In other words, the blow directly threatens consumption and, therefore, also the rate of economic recovery.
Croem says that in the Region it is the highest since 1990
The Croem employers’ association pointed out yesterday that regional inflation closes 2021 -with its 6.3% year-on-year- “at levels not seen in the historical series that began in 2002.” He stated that, if the methodological changes were not taken into account, “it would be the highest inflation figure at the end of the year since 1990.” Although this pressure is explained by the energy component -with historical increases-, a “significant transfer” to other sectors is beginning to be appreciated.
The Murcia Chamber of Commerce indicates that, “depending on the redirection of this anomalous situation”, it is foreseeable that during this year inflation will moderate and be at levels more in line with the pace of the recovery of economic activity. the Murcian Executive to get involved in the need to reactivate collective bargaining “so that workers do not continue to lose purchasing power month after month.” He recalled that wages in the Region are below the national average, “a painful situation for women, whose average annual salary is around 5,000 euros below that of men.”
“Turning any social measure into a reason for fighting for the permanent electoral campaign in which the Community has been established is leading to structural shortcomings that complicate the lives of those who reside in the Region,” he added. UGT indicated that the inflationary progression – “unprecedented and dazzling”- entails a loss of purchasing power of the social majority “especially in the last quarter”. He stressed that positive rates of economic growth and business profit are once again registered, “so there is plenty of room to raise wages and all social benefits.”
He recalled that, since the 2008 crisis, salary review clauses “have been declining in regional agreements or their inclusion has been conditioned by the introduction of caps or limitations.” “If to this – he continues – we add the circumstance that there are nearly 200,000 workers affected by the blocking of their agreements, the devaluation and deterioration that remuneration is suffering in the Region becomes more than evident.” UGT considers that 2022 must suppose a turning point in wage policy and this, in his opinion, “happens to reactivate the Interconfederal Agreement for Employment and Collective Bargaining.”
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