Spain is facing a significant loss in purchasing power, particularly when it comes to the rising cost of food. Between 2019 and 2024, food prices in Spain increased nearly 14% more than wages. This is according to a new report by the Organisation for Economic Co-operation and Development (OECD).
This gap is the third-largest among OECD countries, highlighting how inflation is outpacing wage growth and making it harder for families to afford essential items.
Food prices outpace wages
The price of everyday items like bread, vegetables, and meat has risen sharply in recent years. Even though wages have increased, they haven’t kept up with the cost of living, particularly in the food sector. The result? Many families feel they are losing purchasing power, even as Spain’s overall economy grows.
The OECD report shows that while Spain’s GDP is expected to rise by 2.8% this year, this economic growth isn’t being felt equally across all households. Lower-income families, in particular, are struggling to keep up with rising food costs. Experts like Manuel Hidalgo, an economist at the University of Pablo de Olavide, explain that while more people are joining the workforce, wages aren’t growing fast enough to improve the standard of living.
Widespread problem in Europe
Spain is not alone in facing this issue. Countries like France and Italy have also seen food prices rise faster than wages, but the gap in Spain is larger, with a 14% difference. In contrast, the gap in France is 11%, and in Italy, it’s 13%. However, Spain’s situation is still better than Germany and South Africa, where the gap is even wider.
Reasons behind the price increases
Several factors have contributed to the rising food prices. The war in Ukraine disrupted agricultural exports and drove up the cost of fertilisers and fuel. In addition, droughts have hit Spain hard, particularly affecting key products like olive oil, which is a staple of the Mediterranean diet.
Recent rains are expected to improve crop yields, which may help lower prices in the coming months. Lower fuel costs are also helping to ease the burden on transportation and food production, offering some hope for consumers who have been hit hard by inflation.