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ARCHIVED - Inflation in Spain hits 30-year high amid uncertainties about Ukrainian war
Food, beverages, fuel and electricity are the main areas where prices are soaring in Spain
The prices of common consumer products and services in Spain shot up by 7.4% in February, its largest jump since July 1986 and a significant increase on January’s already high hike of 6.1%. To find a more noteworthy period of inflation, we would have to go back as far as December 1986, when prices rose by a crippling 8.3%.
The preliminary data released by the National Institute of Statistics (INE) published this week indicates that food and non-alcoholic beverages, along with fuels and electricity, are responsible for pushing up the Consumer Price Index (CPI) in Spain last month, but the more worrying statistics relate to the core CPI, which excludes fuel and food prices. This skyrocketed 60% in February, indicating strongly that prices will continue to rise, at least in the short term.
Interestingly, while petrol and diesel are continuing their relentless climb, electricity prices in the wholesale market actually fell slightly compared to January; given the fact that Putin didn’t invade Ukraine until February 24, the impact of the war doesn’t appear to have hit energy costs significantly yet.
Nevertheless, the war in Ukraine has already pushed up the prices of gas and oil, two products which had already reached unprecedented levels last year.
The conflict in Eastern Europe has completely changed the economic outlook, with analysts warning that Russia’s actions could create a “brutal energy crisis” with inflation remaining at its current high level.
Controlling the energy supply is one of the main weapons that Putin has to counterattack the heavy battery of sanctions imposed upon him by Europe and the United States, and an abrupt cut in oil and gas would heap serious financial pressure on countries such as Finland, Hungary, Germany and Poland.
And although Spain is less dependent on Russia for its energy, a supply crisis in Europe would inevitably push up the prices exponentially.
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