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ECONOMY

Rate of inflation in Spain reaches highest level in 37 years

Spain's rate of inflation has jumped to 10.2 percent, the highest level since 1985, according to data from Spain's National Institute of Statistics (INE).

Rate of inflation in Spain reaches highest level in 37 years
Photo: Pixabay.

The Spanish Consumer Price Index (CPI) – the instrument used to measure inflation – rose by 10.2 percent year-on-year in June, the first time it has broken the 10 percent threshold since April 1985, according to data from the National Statistics Institute (INE).

The CPI increased again from 8.7 percent the previous month, a 1.5 percent jump, and the June data represents an increase of 0.4 percent on the peak month of March, which was 9.8 percent.

Core inflation (which does not include unprocessed food or energy product prices in its calculations) increased six tenths in June, to 5.5 percent, itself the highest value since August 1993.

What is the CPI?

According to the INE’s website, the CPI is a “statistical measure of the evolution of the prices of goods and services consumed by the population that reside in family dwellings in Spain.”

The percentage change in CPI is a way of measuring inflation. 

An INE graph showing monthly changes in the CPI in 2021/2022. Photo: INE
 
Food and energy

The cause of the CPI’s sharp rise in June, the INE says, was largely down to price increases in fuel, electricity, and food.

Food products registered a year-on-year increase of 12.9 percent in June, a rate almost two points higher than the May numbers and the highest since January 1994. Of the increasing food prices, the price of fruits, vegetables, meat, bread, cereals, and cheese were particularly pronounced.

The prices of oils and fats have grown by 37 percent. Eggs are 23.9 percent more expensive, and several other staple foodstuffs have increased by double-digits: notably milk (20.4 percent) and fresh fruits (19.3 percent).

Equally, rises in fuel prices led to the year-on-year rate in transport rising by an eye watering 19.2 percent, more than four points above that recorded in May, while the knock-on effects of spiking food prices have caused the year-on-year rate of hotels, bars, and restaurants in June to rise to 7.2 percent, 0.9 percent more than in May.

In the last year alone, heating, lighting and water prices have increased by a staggering 35 percent.

READ ALSO: Spain to slap windfall taxes on banks, energy firms

READ ALSO: Spain to cut electricity tax by half to ease inflation pain

Regional breakdown

An INE graphic showing the regional CPI rises across mainland Spain. Photo: INE

The rise in prices however, isn’t spread evenly across Spain.

Castilla-La Mancha recorded the highest inflation in June with 12.7 percent, followed by Castilla y León with 11.6 percent and Galicia with 11.1 percent.

Prices continued to rise but stayed below 9 percent in the Canary Islands (8.5 percent), and in Ceuta (9.3 percent) and Madrid (9.5 percent) prices continued to rise by stayed below the double-digit threshold.

Despite these slight regional variations, Spaniards across the country are facing the financial pinch caused by a double-pronged economic malaise of rising fuel bills as a byproduct of Russia’s invasion of Ukraine, and restarting the economy after two years of shut-down after the COVID-19 pandemic. 

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WORKING IN SPAIN

Workers in Spain earn 20 percent less than EU average

Despite being one of the largest economies in Europe, Spain may not be a good place to work for those looking to be well compensated as figures reveal workers earn a lot less than some of their European neighbours.

Workers in Spain earn 20 percent less than EU average

People working in Spain earn, on average, €1,751 per month. This is 20 percent less or €443 less than the EU average of €2,194, according to human resource giant Adecco and their monitor on wages, published Tuesday.

Life in Spain is getting more and more expensive due to soaring inflation and rising energy costs, but despite having the highest average salary in history, people in Spain can’t afford as much as they did 13 years ago, due to diminishing purchasing power.

Within the EU, Adecco reported that 15 countries have wages lower than Spain, and 11 have higher. 

Nine European countries have average salaries above €2,500 per month, while in Spain the average salary does not even reach €2,000. This is the case in Finland (€2,603), Sweden (€2,623), Austria (€2,788), Belgium (€2,830), the Netherlands (€2,883), Ireland (€2,920), Germany (€3,003), Denmark (€3,458 ) and Luxembourg (€3,502).

In Germany for example, employees earn on average 42 percent more than in Spain, meaning that workers in Spain would have to work 20 months, almost two years, to be able to earn the same as a German.

There is more than €1,250 difference between what those in Germany are paid and what those in Spain are paid.

On the other hand, there are several EU countries with salaries less than in Spain. Those with average salaries of €1,100 are mostly found in Eastern Europe, with Bulgaria being the EU country with the lowest remuneration of just €562 per month.

This is followed by Romania (€718), Hungary (€798), Poland (€833), Croatia (€863), Latvia (€892), Slovakia (€977), Lithuania (€1,007), Greece (€1,034), Estonia (€1,053) and the Czech Republic (€1,078).

Spain forms part of the middle group that earn more than €1,100 per month but less than €2,500 per month. Those EU countries with salaries similar to Spain include Portugal (€1,106), Cyprus (€1,309), Malta (€1,329), Slovenia (€1,417), Italy (€2,074) and France (€2,446). However, there are of course wide gaps between these countries too.  

Compared to its nearest neighbours, Spanish workers earn 58 percent more than those in Portugal or €645 more per month, but 28.4 percent less than those in France or €695 less each month. 

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