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ARCHIVED - Inflation in Spain hits highest figure in 29 years
Unions in Spain are committed to raising wages in the face of record inflation
For the ninth consecutive month, the cost of the most used consumer goods has increased in Spain this November, raising inflation by 5.6% compared to the same period last year and representing the highest figure since September 1992.
The latest data from the National Institute of Statistics (INE) published on Monday November 29 shows that food and fuel costs have made the most dramatic jump this month, while electricity prices actually fell slightly in November.
Although energy costs in general continue to skyrocket, a situation which the experts expect to last until the spring of 2022, inflation is likely to begin to decline in the coming months. This is because the increase in the Consumer Price Index (CPI) has been driven by the extraordinary drop in prices in 2020, something which will level out over time.
Despite this, the Labour Minister and several unions in Spain are determined to increase the working wage, even though the Bank of Spain has strenuously advised against this move, insisting that raising salaries in response to the CPI would caused a “vicious circle” of inflation. Contrary to this, the European Trade Union Confederation has insisted that rising prices alongside sub-standard pay are causing people to lose purchasing power, resulting in both workers and pensioners experiencing the greatest levels of poverty in two decades.
The unions have dismissed the Bank’s fears, pointing out that a rise in salary would have but a minor effect on inflation, arguing that Spain has “an endemic salary problem”, since wages have virtually been frozen since 2008.
One of the biggest impacts of the November CPI data is that, under the new reform, pensions will increase by 2.51%, as the amount is calculated based on the average rise in a twelve month period. Overall, the effect of inflation on the pension system will cost the state coffers about 5.9 billion euros.
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