The constant increase in the CPI (Consumer Price Index) registered in recent quarters, both in Spain and in the rest of the euro zone, is closely linked to the global increase in the price of food raw materials and, as can be easily verified, in its most faithful reflection: the final price of the shopping basket. The latest advance data from the INE indicate a rise of 11.5% in Julyalthough this phenomenon can be traced back to the beginning of the year.
The Bank of Spain has highlighted this factor in the article 'The increase in the prices of food raw materials and their transfer to consumer prices in the euro area', published by the General Directorate of Economy and Statistics of the same . Specifically, it points out how the price of food accounts for 17% of the inflationary rise in the euro zone as a whole, contributing 0.9 points to the advance of the harmonized index of consumer prices (HICP) - which consolidates the CPI of the zone euro to have a common measure.
In the case of Spain, the weight of rising food prices increased to 22%, contributing 2.9 points to the country's inflation. The difference responds to the different magnitudes in the increases, since in Spain the increase is greater than in the rest of the euro zone.
While in Spain the price of oil increased by 37% in year-on-year terms and cereals, coffee, dairy products and eggs, and meat increased by around 16%, 11%, 16% and 10%, respectively , in the rest of the eurozone the figures are moderate. The euro area recorded year-on-year increases of 29% in oil, 11% in cereals and coffee and around 12% in dairy products, eggs and meat.
When comparing the price increases since January 2021, when the first symptoms of the inflationary episode began to be noticed, the differences between Spain and the euro zone increase in some products. Oil has become 56% more expensive in Spain since January 2021 compared to a 34% rise in the eurozone and, when comparing the price of cereals, the increase in Spain was 17% while in the eurozone it is limited to 12% .
Impact on the final price
Despite the fact that the regulations of the CAP (common agricultural policy) have moderated the increase in the cost of food raw materials in the European Union compared to the rest of the economies, according to the data collected for the preparation of the article, inflation continues to be one of the the main burdens of the European economy, as pointed out by the IMF in your latest report.
The Bank of Spain also collects how price increases have been transmitted throughout the value chain of production and distribution of the goods and services that are part of the consumer basket. According to the article, the increase in prices is occurring gradually, reflecting the fact that producers along the value chain and retailers initially absorb, and progressively pass on, the increase in the cost of raw materials to the final consumer.