The unstoppable rise in electricity prices has
boosted the CPI by 5.5%, its highest level in the last 20 years, since September 1992. Spain was then experiencing the hangover from the Seville Expo and of the Barcelona Olympic Games that had triggered the worldwide popularity of our country. Today, with the recovery still surrounded by uncertainties and after having suffered the largest drop in GDP of all advanced economies due to Covid, the circumstances are radically different. The causes of the price increase are intertwined: on the one hand, the
world energy crisis, on the other, the
consumption recovery following an unprecedented shutdown of the economy due to the pandemic and, finally, the
historic bottleneck in global supply chains.
Despite the fact that most experts defend the temporary nature of this rebound, which is expected to begin to subside once the gear of the global recovery has been permanently greased, there are also more and more voices that warn of the risks of this luck of
perfect storm lasts longer than expected. And it is that the effects both for the pocket of the citizens and for the public accounts will be remarkable.
Pensions: Rises to the rise and “pay” in January
The rebound in inflation in 2021 is being good news for pensioners’ pockets, but it will be a blow to the already deteriorated finances of Social Security, suffering from a heart attack deficit and a debt that is estimated to close the year in the environment of 100,000 million. The persistent rise in prices will force the body that pays the payroll to dust off and pay a compensatory ‘pay’ next January to prevent pensioners from losing purchasing power, given that their incomes rose 0.9% and inflation will end the year well above that percentage, according to economists and research services.
Thus, at the beginning of 2022, retirees will perceive the difference between the increase that was applied to them and the average inflation until November. On a stage where he is average inflation will remain around 2.5% the extra payment would be the equivalent of 1.6 tenths, which would imply an additional expense of about 2,300 million, which would be consolidated in lifetime retirements for future increases. The invoice for the deviation in prices would therefore be 4,600 million, adding the increase and the consolidation. This amount should be applied, in turn, the increase in January, which will once again be the average inflation of 2022.
Salaries: upward pressures for companies
Salaries are losing purchasing power. The average rise agreed in agreements until October is 1.5%, which contrasts with the 5.5% in which inflation has risen. This scenario threatens to raise the salary bill for companies, taking into account the salary review clauses linked to the closing of inflation each year and designed so that workers do not lose purchasing power. This escalation of inflation, in addition to making a hole in the pocket of the companies, will put upward pressure on the demands of the unions in collective bargaining. The UGT has already warned that it considers that the 1.5% rise in contract wages and the 1.6% rise in the Interprofessional minimum wage, which is applied only in the last four months of the year, are insufficient.
Faced with this situation, the union urges the Government to
urgently fulfill commitments contracted throughout his term. The SMI should continue to grow until reaching 1,000 euros in January 2022 and stand at 60% of the average salary (around 1,050 euros) in 2023. On the other hand, as it was promised before the European Comission, the 2012 labor reform must be repealed as soon as possible, which currently allows temporary employment and precariousness to be the main defining characteristics of our labor market and which has sunk wages.
Possible domino effect on rents
The rise in inflation can have a direct impact on housing rental contracts, although always depending on the wording of the contract. Since 2019, the law requires this revision to be specified in leases, so landlords They will only be able to transfer the increase in the CPI if they have so agreed with your tenant in the contract and you can only review the price annually. In any case, due to the intense regulatory change to which the rental market in our country has been subjected in recent years, the key is
take into account the moment of signing the contract.
Erosion of savings
Inflation is known by economists as the “invisible tax” due to the devaluation effect that is almost negligible at first glance that it exerts on the value of real money. Inflation also has an important capacity to erode savings, especially at a time when the return on deposits is at a minimum and banks continue to swim in liquidity thanks to the
European Central Bank measures. In addition, the financial sector is experiencing a major profitability crisis, which has also forced the remuneration of these liabilities to be lowered.