To date, the Government has put 6,500 million euros of public resources on the table in tax rebates, public aid and bonuses to try to contain the upward spiral of prices and, according to the first vice president, Nadia Calviño, and the Finance Minister, María Jesús Montero, is willing to bear a bill of up to 12,000 million for the year as a whole in its attempt to cushion the impact of inflation on households and businesses.
The information on the evolution of prices that is released monthly by the National Institute of Statistics (INE) has been assuring that such a phenomenal budgetary effort has hardly served so far to prevent the CPI from going above 10% and so that the past April fell from 9.8% to 8.3%, in the heat of the entry into force of the shock measures approved by the Government, with the bonus of 20 cents on the price of gasoline and diesel as a star measure.
The expectation that this drop in April would mark the start of a downward trend in the CPI has been short in coming. The advance data published yesterday by the INE estimates that inflation rose in May to 8.7% from the 8.3% it marked during the previous month and, what is more worrying, reveals a firm growth in the underlying rate , which ignores the most volatile elements of the index, such as the price of energy and fresh food, and which in May already stood at 4.9% after an escalation that seems to have no end.
The INE yesterday attributed this rebound in May, after a monthly increase in prices of 0.8%, to the rise in the price of fuel and processed food, which would have more than offset the slight downward trend in the price of electricity.
Analysts, however, appreciate in the May figure the first convincing evidence that companies have already begun to decisively transfer to their retail prices the higher costs that they have been bearing for months due to the rise in raw materials, the energy bill or transport contracts.
The assessment released yesterday by the Caixabank analyst team assured that “high energy prices have continued to trickle down to the other components of the consumer basket, by increasing transport and production costs. In this sense, the focus is increasingly on food and the ‘core’ components of the consumer basket. A panorama that, according to the institution, announces that although the general index will moderate in the coming months, the hard core of the shopping basket will continue to become more expensive for “a few more months”, which will surely add pressure to the salary negotiation.
The Bank of Spain drew a similar picture. The institution’s Director of Economy and Statistics, Ángel Gavilán, assured yesterday in Seville that the institution’s expectation is that it will have to revise downwards its inflation forecast for the year, from 7.5% today, but On the contrary, it will have to raise that of subjacent inflation. The translation is that the statistical index that measures prices, which is taken as a reference, for example, to update pensions, at an extra cost of 1,700 million euros for each CPI point, will be smoother than expected, but that the Products that make up the hard core of the Spanish shopping basket are going to become more expensive than expected, which may have negative effects on consumption.
The Bank of Spain said something else. That the Government’s policy must be aimed at protecting the income of the most vulnerable and not with general tax cuts, such as those that have been adopted to lower citizens’ electricity bills, but with other types of more surgical measures aimed at vulnerable groups, for example through a temporary reduction in their personal income tax burden.
The ineffectiveness of the measures adopted by the Government to contain inflation and the very high budgetary cost that they entail for a country that the European Commission has just warned about the high vulnerability of its public accounts put the eventual extension of these starting June 30.
The first vice president of the Government, Nadia Calviño, has already advanced that the Executive is analyzing the scope of the measures adopted in order to determine their possible extension or, where appropriate, their correction to try to make them more efficient.
In the spotlight, the general bonus of 20 cents per liter of gasoline, which the Government established on April 1, whose application has been a permanent focus of problems and which has been contested by analysts and institutions such as the Bank of Spain and the Fiscal Responsibility Authority due to its high budgetary cost and its lack of finesse, since it reduces the price of fuel for all consumers equally and, according to the Bank of Spain, benefits the highest incomes more than the lowest.
The measure seemed to have an immediate effect in April, when the CPI fell from the 9.8% ceiling it had marked in March to 8.3%, but the rise in inflation in May and the suspicion that the bonus was not It has only encouraged demand but has ended up being absorbed and reflected in price at service stations that have called it into question.
The consensus of analysts is that the CPI will continue at levels similar to the current one until July or August and it is expected that after that it will begin to fall, approaching 2% in 2023. They also assume that there is an increasing risk that inflationary pressures continue.
