The consumer price index (CPI) rose 5.4% in October year-on-year, one tenth less than anticipated by the National Statistics Institute (INE), but almost one and a half points above the rate registered in September, an increase mainly caused by the rise in electricity prices. Despite this slight downward correction, it is about the highest rate in nearly three decades, that erodes the purchasing power of wages and savings and makes the pension bill more expensive, which are linked to the average CPI for the year in November.
According to the information updated this Friday by the INE, the greatest influence on the rise in inflation has been the group of the living place, which increased by 20.5% annually due to the increase in electricity prices and, to a lesser extent, gas and diesel for heating. The section of heating, lighting and water distribution shot up 7.2% compared to September, accumulated a rise of 36.3% in the first 10 months and the annual rate stood at 42%.
It has also influenced the increase in inflation in October the transport group, with an increase of 12.3% as a result of the rise in the prices of fuels and lubricants for personal transportation. The Consumer Price Index (CPI) in Catalonia rose 1.7 points in October compared to September and the interannual rate stood at 5.2%, 1.5 points above that registered the previous month.
Catalonia it is the eleventh autonomous community with the highest interannual rate, with an interannual rate of 5.2%, below the average; in a classification led by Castilla-La Mancha (6.5%), Castilla y León (6.1%) and La Rioja (5.9%).
Behind this rebound in inflation, which is experiencing its eighth consecutive month of increases, is the rise in cost of electricity and, to a lesser extent, of fuels and lubricants for personal vehicles, which in October of last year became cheaper. The consumer price index (CPI) shot up 2% in October compared to September, according to INE data.
Core inflation, which excludes energy and unprocessed food, reached a rate of 1.4%, and certified the largest difference with the general CPI since 1986. In any case, it also marks an upward trend from 0% to which It arrived last April, which would indicate that the increase in energy is being transferred to other products. In fact, in the shopping basket, with respect to September the clothing for men, women and children and babies 12.2%, 13.6% and 10.9% shot up, respectively. So far this year is the fresh fruit which stands out, with 13.6% and in annual rate, the oils and fats, with 23.9%.
Wages
And it is that one of the risks of this inflation impulse are the so-called second round effects, through which these increases end up being transferred by companies to products and services to avoid losing margins. At the same time, it means the possibility of pressures to increase wages, since they lose purchasing power, thereby entering into a price-wage spiral. The average increase in the agreement was 1.55% in October, far from the inflation rate. And many agreements do not provide for the update with respect to current inflation. The evolution of inflation has led to the launching of proposals by the Vice President of the European Central Bank (ECB), Luis de Guindos, how to link the wage increase to underlying inflation, that is, that which excludes the most volatile elements, such as inflation. energy or unprocessed food, considering that the rise in the general price level of prices is a transitory phenomenon. some employers welcome the idea, while unions reject any risk of loss of purchasing power of wages.
Saving
In turn, such high inflation, with interest rates, reduces the purchasing power of savings, especially that in bank accounts and deposits, with an average interest of 0.01% in those with a term of up to one year; 0.57% between one year and up to two and 0.20% in terms of more than two years, according to data from the Bank of Spain.
Related news
Pensions
Another effect of the rise in the general price level is its impact on pensions, the update of which has once again been linked to the evolution of the average consumer price index (CPI) for the year up to November. Until October, average inflation for the year was around 2.5%. Social Security must pay the difference between the level set in November and the 0.9% that pensions increased in 2021. Furthermore, in 2022 benefits must be revalued from this level.
Reference-www.elperiodico.com