Life in Spain has become more than 6% more expensive in a year. The Spaniard pays an average of 45% more for electricity and petrol compared to January 2021. Analysts are looking at rising inflation and how long the price increases will last.
On Tuesday, Spain’s National Institute of Statistics (INE) released its consumer price indices for January 2022. According to INE calculations, the cost of living increased by 6.1 percent in January 2022 compared to a year ago.
Electricity and petrol increased most of all categories
Of the 199 categories surveyed, electricity is still the product that has increased the most in price. Together with petrol costs, these categories rose the fastest in Spain. For example, electricity is no less than 46.4% more expensive than a year ago. After electricity, petrol and diesel rose the fastest in price. Those products are on average 44.6% more expensive than a year ago.
Above-average price increase in Spanish supermarkets
The prices in the supermarket rose also considerably. In general, almost all products have had higher prices in the last three months. However, there are some categories where prices are experiencing an above-average increase according to the INE.
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Olive oil is currently 30.1% more expensive than a year ago. Pasta is 20% more expensive and flour more than 10%. The price of fruit (+8.8%), rice (+8%), poultry (+6.9%), milk (+6%), and eggs (+6.6) have also increased considerably. For an overnight stay in, for example, hotels and guest houses, Spaniards pay more than 18% more than in January 2021.
Price increases permanent or temporary?
However, the pressure on prices is slightly lower in January than in December 2021, after which electricity prices fell slightly. Analysts expect this period of high prices to ease from the second half of 2022. However, a growing number of experts presume inflation will be lasting. For the time being, the European Commission expects that the high prices will not persist and that they will decrease later this year.
Continued inflation crucial for European and Spanish economies
Whether or not inflation is transient is a key issue for the European and Spanish economies. Assuming prices will remain so high, employees will exert pressure to increase salaries. However, the signals pointing in the direction of this domino effect are not very clear yet. The Bank of Europe has already discussed interest rate hikes by the end of this year. These decisions are the most important instrument for banks to combat inflation.