Spain | How has inflation made us poorer?

Since the beginning of 2020, the loss of purchasing power, measured by the increase in the Consumer Price Index (CPI), has been almost 20%.

Key points

• Key points:
• This has occurred between the pandemic period and another, more recent period where much of the higher inflation has come from an increase in overall production costs and, in particular, in those of energy-intensive companies, as well as in agriculture.
• There are two general components of the CPI that have increased at above-average rates: energy and food. Between March 2020 and March 2024, there was a 32% price increase in the former and a 30% increase in the latter.
• Of the rest of the components of the consumer basket, non-energy industrial goods rank first. These are goods where technological improvement is constant and competition fierce at a worldwide level, so prices tend to show growth equal to or lower than the rest of the economy.
• The second CPI component to consider is the most important: services. The price of services has also increased by only 11% over the last four years, affected by the impact of the pandemic, though this was not the only factor.
• In services, the surprising strength in tourism, particularly non-resident consumption in Spain, together with a less restrictive ECB monetary policy in the coming months, will continue to push up prices in the accommodations and hospitality sector as a whole.

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