Inflation has already shot up to 10%: the salaries of the Spanish, meanwhile, remain stagnant

Inflation figures continue to break forecasts, for the worse, almost month to month. Different economic sources pointed out between March and May 2022 that the Consumer Price Index (CPI) would not again exceed the annual maximum reached in March, of 9.8%, and that the average for the year would be around 7%. However, the latest data from the National Institute of Statistics (INE) have dashed that optimism: in June, the CPI has reached 10.2%.

This means that, to no one’s surprise, we are increasingly paying more for almost all products and services than the slight improvement in prices in April (CPI at 8.3%) and May (CPI at 8.7%) It was a mirage, that the aid and subsidies from the Government (such as the 20 cents for fuel) have long since been left in the lurch and that the purchasing power of the Spaniards is less and less, because the average growth of salaries is still very below inflation.

insufficient wages. The forecast on the increase in wages has also failed: they were expected to grow below 4% during 2022 and, according to INE data, during the first quarter of 2022 (the last one for which processed data is available) would have increased by an average of 4.3% per year. An increase that does not compensate, not even remotely, for the uncontrolled rise in prices that Spain has been experiencing for several months and that has reached its annual maximum, for the moment, this June.

And which also means that wage growth is stagnant, since last year rose 3.09%while inflation runs amok.

The highest CPI in 40 years. With this new rise, the CPI reaches its highest rise since April 1985, 37 years ago, when it reached an identical figure. Of course, there is an important difference with that situation almost four decades ago: that year the average annual wage increase was 9.4%, according to El País.

Complicated situation. The rise in the CPI and the general feeling of all of us who regularly go to gas stations and supermarkets, to give a few examples, do not invite optimism. The government’s measures seem to have had no effect and no matter how much they continue to lower taxes and launch anti-crisis packages, it seems very difficult to stop inflation in the short term.

Why? Because it is so widespread in all sectors that specific policies in one of them have a very difficult time curbing the general trend, no matter how much they briefly alleviate that specific part of the economy. The fuel subsidy is the best example of this.

The worst is yet to come? Various economic institutions indicated in March that the year-on-year CPI would not exceed the figure reached in that month, 9.8%, an increase that was caused by extraordinary circumstantial circumstances such as the war in Ukraine, the sanctions derived from them or the problems in the chain of global supplies, among others.

However, these forecasts failed, and that added to generalized inflation and the failure, for the time being, of the Government’s measures to tackle it invite pessimism. At some point, the circumstances that have caused this increase in the CPI will ease and the containment plans of the Government and various international institutions will begin to work until the costs of selling products and services stabilize. But that time does not seem close.

Image | Pelayo Arbues