A new record! Spain hit hard by soaring inflation – Highest in 30 years

SPAIN’S annual inflation rate soared to 6.7 percent in December, the highest in almost 30 years, according to data published by the National Statistics Institute (INE).

Spain: British expat questions enforcement of Covid passes

Sign up to receive our rundown of the day’s top stories direct to your inbox

Invalid email

We use your sign-up to provide content in ways you’ve consented to and to improve our understanding of you. This may include adverts from us and 3rd parties based on our understanding. You can unsubscribe at any time. More info

The data published on Thursday reflects a rise in the cost of living of 6.7 percent over the previous year. The current month’s inflation figure is 1.1 percent higher than the 5.5 percent recorded in November.

If the data shared by the INE is to be believed then 2021 would end with average inflation of 3.1 percent, the highest level in a decade.

Last year, prices fell an average of 0.3 percent owing to the effects caused by the initial shock of the pandemic.

To find a similar price spike, one would have to go back to March 1992, when the CPI was 6.9 percent.

While the INE has not yet shared detailed information on what all has led to the spike in the inflation rate, it gave a hint about the products which are pulling up the general price index.

Spain inflation

Spain hit hard by soaring inflation – Highest in 30 years (Image: Getty Images)

Spain inflation

The data published on Thursday reflects a rise in the cost of living of 6.7 percent (Image: Getty Images)

According to the initial trends, electricity appeared to be the main reason for the rise in price index.

The rise in food prices, which experienced a notable drop in prices in 2020, is also believed to have played a crucial role.

In December, the wholesale price of electricity averaged 242 euros per megawatt hour (€/MWh), 25 percent above November’s level, which closed with an average of 193.43 €/MWh.

Wholesale electricity – which directly affects what almost 11 million consumers pay on their bills and indirectly affects the rest – was five times more expensive in December than last year, when the average in the market was 41.97 €/MWh.

READ MORE: Andrew Neil gives update on alleged French ban on Britons

Spain inflation

Experts believe that the factors behind the rise in prices will be mitigated over the course of 2022 (Image: Getty Images)

The upturn in inflation in December compared to last month has a strong correlation with the evolution of the price of electricity in the wholesale market – where retailers buy the energy that they then supply to consumers.

Leading analysts in the industry are of the view that inflation will continue to soar during the coming year, especially in the first half of the year, before gradually normalizing in 2023 and 2024.

The Bank of Spain in its latest macroeconomic projections forecasts an average inflation of 3.7% for 2022, a figure notably higher than that of other analysts such as the OECD (3.2%), the Funcas panel (2.9%) or the European Commission (2.8%).

In any case, and unlike what is happening in the United States, the predominant discourse in Spain continues to be that this inflationary outbreak will be transitory.

DON’T MISS:

No further restrictions required despite ‘rapidly’ surging cases

50-year-old woman fumes over ‘sexual’ Secret Santa gift – ‘Vile’

Royal Family LIVE: Kate bday plan ‘will avoid Meghan one-upmanship’

Spain inflation

To find a similar price spike, one would have to go back to March 1992, when the CPI was 6.9 percent (Image: Getty Images)

Spain inflation

Last year, prices fell an average of 0.3 percent owing to the effects caused by pandemic (Image: Getty Images)

Experts believe that the factors behind the rise in prices will be mitigated over the course of 2022.

In Spain and much of Europe, the most prominent one is energy prices, especially gas, a key energy source in determining the price of electricity.

Forecasts suggest that gas prices will start to drop from next spring onwards due to both an increase in supply and a fall in demand after the winter.

Additional reporting by Maria Ortega

Roy Walsh

Related post