Food, energy and tourist services make vacations more expensive for Spaniards and shoot up the CPI to 10.8% in July

Inflation finds no ceiling. As the National Institute of Statistics (INE) had advanced a few days ago, the Consumer Price Index (CPI) climbed last July to 10.8% -the highest rise recorded since 1984-, boosted by the unstoppable increase in food prices, the persistence of price tensions in electricity and fuel and the start of the tourist season, which has brought with it substantial price increases in the sectors most linked to this industry.

Spaniards face their most expensive vacations. The cost of the basic shopping basket continues to rise. According to the INE, in July, meat (1.1%), bread and cereals (1.4%), dairy products (1.6%), eggs (1.6%), fish ( 0.9%) and water and soft drinks (1.1%) were among the products that experienced the most price increases. The chapters of food and non-alcoholic beverages accumulated a rise of 13.5% in the last year, an increase in prices that is unprecedented since this record began in 1994.

Citizens have also had to face the hottest summer in recent years with the highest energy prices in history. In July, the price of electricity, which had already shown a rise of more than 50% since the beginning of the year, hit another growth spurt of 6.4%, probably helped by the effect of the tax cut that the Government approved a year ago now and that moderated the evolution of the price of electricity in the month of July 2021. Be that as it may, it continues to be the main factor in raising prices in Spain. Gas rose another 5.3% and the only relief came from fuel prices, which showed a small drop of 3.7% in the case of diesel and 5.9% in the case of gasoline .

The other vector of increased cost of living in the month of July was the tourism industry. After two survival exercises, amid the restrictions caused by the pandemic, the favorable expectations for the sector seem to have encouraged it to normalize its rates as well. The information provided by the INE reveals a 13% rise in tourist packages, 3.5% in accommodation services and 0.6% in restaurants, with price increases in typical products of this time such as beer .

The effect of the Government reductions is moderated

The data for July has also shown how government action has lost some strength when it comes to moderating prices. The Consumer Price Index at Constant Taxes, the indicator that measures how the CPI would be evolving if the authorities had not introduced any changes in the tax system, stood at 11.5% in July, just seven tenths above the index general. According to the INE, that is the effect that the Government's tax reductions have had, eight tenths. Well below the three points proclaimed by the Government and which have led it to state that inflation would be 15% had it not been for government action.

It must be said here that this indicator only discounts the effect of fiscal measures and does not take into account measures of another nature such as the 20-cent bonus on the price of gasoline, on which a moderating effect of prices is presumed, but since it is a non-fiscal measure, it is not taken into account.

The CPI (consumer price index) data for July published by the INE indicates a monthly increase of 0.6 points compared to the previous data for June, placing the indicator at 10.8%, the highest level since September 1984.

On the other hand, the variation rate of the harmonized CPI, which estimates spending based on consumption within the country by households, increased seven tenths and reached 10.7% with a monthly variation of -0.6%.

The measures adopted in recent months by central banks to combat the upward trend in inflation, with successive rises in interest rates by the United States Federal Reserve (Fed), the Bank of England and the European Central Bank (ECB) have not yet been translated into inflationary terms.

Germany remained stable in July, with a decrease of 0.1% compared to June and 0.4% taking May as a reference, which places it at 7.5%. The same is not true of Portugal, whose index shot up to 9.1% in July, the highest in the country's last 30 years. In the case of the United States, inflation also remained stable in July, with a slight fall of six tenths compared to June, resulting in an index of 9.1%.

Source link