Inflation in Spain soared in December up to 6.7%According to official data released this Thursday, a figure not seen since 1992 that threatens the social program of the left-wing coalition government.
The Consumer Price Index (CPI) in Spain increased in December to 6.7%, twelve tenths more than November (5.5%) and the highest figure in 29 years, according to provisional data for December released this Thursday by the National Institute of Statistics (INE).
“The advanced figure for December, 6.7%, would represent the highest rate of the CPI since March 1992,” the agency reported.
The increase is explained by the rise in the price of electricity and, to a lesser extent, food, explained the INE.
Thus, the estimated annual variation rate of core inflation, which does not include unprocessed food and energy products, was 2.1%, five points below the general CPI.
Increased pensions and salaries, threatened
The inflation trigger is a blow to the government chaired by the socialist Pedro Sánchez, which could see how its increase in the minimum wage or the revaluation of pensions are canceled by the rise in prices.
“An inflation at 6.7% is unbearable for the middle and working classes. They must take action, “wrote Pablo Casado, leader of the conservative Popular Party, the first opposition party, on social media.
The spokesman for the Socialists in Congress, Héctor Gómez, called the phenomenon “conjunctural”, but admitted that “it is going to be prolonged in time, longer than we would all like”, in statements to public television TVE.
Inflation began to rise at the beginning of the year in Spain, as in the rest of the European Union, after having remained negative for most of 2020 due to the economic impact of confinement due to the coronavirus pandemic.
In its forecasts for 2022, released in mid-December, the Bank of Spain estimated that average annual inflation will be 3% in 2021, and, “after remaining high in the first months of 2022, (…) it will decelerate sharply. subsequently”.
In the euro zone, inflation reached 4.9% per year in November, the highest level since the introduction of the single currency in 1999.
According to the European Central Bank, this increase is due to the exceptional circumstances created by the pandemic, which are expected to disappear during 2022.
In mid-December, the ECB significantly raised its inflation forecasts for the euro zone in 2021 and 2022, due to energy prices and shortages in industry.
However, it expects inflation to fall below 2%, its medium-term objective, starting in 2023.
Eyes are turned to central banks
“The biggest surprise of 2021 was the rise in inflation,” Goldman Sachs analysts wrote in their forecast for 2022.
It was driven by the disorganization of supply chains and the shortage of essential products for international trade, such as semiconductors, a consequence of the explosion in demand during and after the crisis.
But also because of the discouragement of many actors in world trade, such as port unloaders, truck drivers or supermarket cashiers who did not return to work after the lockdowns and caused a labor shortage.
Inflation is also explained by the increase in the price of raw materials (wood, copper, steel) and energy (gasoline, gas, electricity).
Although at the beginning of this inflationary spike it was believed to be temporary and linked to the resumption of full economic activity, central banks could be pushed to withdraw stimulus from the pandemic.
Already in early December, the OECD (Organization for Economic Cooperation and Development) invited central bankers to make “clear to what extent inflation figures above the target will be tolerated” in their interest rate policies.
Reference-www.eleconomista.com.mx