Inflation has given the Spaniards' pockets a break in November. According to the provisional advance released this Wednesday by the National Institute of Statistics (INE), the CPI has moderated three tenths in the last month to register an interannual variation rate of 3.2%, favored by the lowering of fuel prices and the containing increases in food.

The slowdown in prices noted in November represents a positive variation in the CPI with respect to the interannual rate of 3.5% at which the data had been stagnant for two months, after having returned to increases in the second half of the year from 1 .9% registered in June. This means that, although prices continue to rise, they do so at a slower pace and far from the levels of a year ago, when in November 2022 inflation reached a rate of 6.8%. Compared to October, prices have decreased by 0.4%.

“The advance CPI data for November is very good news,” said the First Vice President and Minister of Economy, Nadia Calviño, who highlighted that “salaries continue to gain purchasing power and Spanish companies, competitiveness.”. The inflation data for November closes the period with which the increase in contributory pensions is calculated to adjust them to the CPI. If the advance is confirmed, the increase in 2024 would be 3.8%. Also currently on the table is the increase in the minimum wage, which could take inflation as a reference, according to the Minister of Labor, Yolanda Díaz, last week.

The INE attributes the drop in inflation in November to a decrease in the price of fuel and tourist packages, as well as a slowdown in food prices, which would have become less expensive in the last month than expected. they did in November 2022. On the other hand, the statistical institute points out that the behavior of electricity has been worse than that recorded a year before, when its price fell by 22.4%.

While waiting to know the complete breakdown of the November inflation data by product categories – which will be published on December 14 along with the final reading of the general index – the CPI for food grew by 9.5% in October. Although it still remains well above the general index, the inflation of these essential products has experienced a pronounced moderation so far this year, after peaking in February when it reached a rate of 16.6%.

Core CPI down

The containment of food prices has been reflected in the behavior of underlying inflation, which is what discounts the price of energy and unprocessed food from the calculation due to their high volatility.. Specifically, the core CPI slowed down in November, registering a year-on-year variation rate of 4.5%, seven tenths below the 5.2% recorded in October.

This is the fourth consecutive month in which core inflation moderates its growth. The index has thus registered its lowest mark in more than a year, since it stood at 4.4% in April 2022.. At that time, the indicator was immersed in an escalation that peaked in February of this year, reaching an interannual rate of 7.6%.

Underlying inflation allows us to observe to what extent the rise in prices has spread to the economy as a whole, so its moderation in recent months is positive.. In fact, it is an indicator that is especially observed to calculate economic forecasts. Analysts like Funcas, for example, estimate that inflation will rise again to 3.5% in the first half of 2024. In that sense, the president of the European Central Bank, Christine Lagarde, warned on Monday that inflation will rebound in the coming months and insisted that it is too soon to “declare victory.

Contributory pensions will rise by 3.8% next year, in line with the average inflation that has been registered in the last twelve months. The INE published this Wednesday the Consumer Price Index (CPI) data for November, the last figure that was missing to fully specify the dimension of the revaluation.

An increase of 3.8% will imply an increase in the system's average pension of about 45.5 euros per month. Currently, the average benefit amounts to 1,198 euros per month in 14 payments. In the case of retirements, the average benefit will be revalued by 52 euros per month and will thus go from the current 1,378 euros per month to 1,430 euros next year.. However, as more people will continue to enter the system with higher pensions in 2024, the averages are expected to rise somewhat more.

Another of the unknowns that is cleared up with the November CPI is the amount of the maximum pension, also linked to inflation. This benefit will rise from the current 3,059 euros per month in 14 payments to 3,175 next year (116 euros more). Along the same lines, the maximum contribution bases will increase from the current 4,495.5 euros to 4,720 in 2024. The part of a worker's salary that exceeds that amount is exempt from contributions.

In addition, non-contributory pensions—those that do not require having contributed to Social Security in order to receive them—will increase by 6.8%, in line with the provisions of the reform approved by the Executive in March of this year.. This percentage increase will also be applied to the minimum contributory pension and the minimum vital income.

In this way, the non-contributory individual retirement pension will be 517 euros per month in 14 payments (33 euros more than in 2023); The minimum vital income for an adult without burdens will rise to 604 euros per month in 12 payments (38 euros more) and the minimum contributory retirement pension with a dependent spouse will grow to 1,032 euros per month in 14 payments (66 euros more per month ).

Now that the size of the pension increase is known, the Government must make it official through a royal decree that is expected to be published in December, when the inflation data for November is final.. In addition, the Ministry of Inclusion, Social Security and Migration usually sends a letter to pensioners in January in which it informs them of how their benefit is after the revaluation.

The increase in all benefits, the maximum pension and the contribution bases must be reflected in the General State Budgets, where the Government will also detail the cost of the revaluation. If the scales used by the Bank of Spain are applied, which estimates that for each point of inflation spending increases by 1,800 million euros, the cost of the revaluation will be around 6,840 million.

The purchasing power of pensioners is protected by law since December 2021, in such a way that benefits are always revalued with inflation. However, this was not always like that. In 2011 the Government froze all pensions except the minimum and non-contributory ones to cut expenses in the midst of the financial crisis. In 2013, a mechanism was introduced that limited revaluations to 0.25% while Social Security was in deficit.

The pressure of the Euribor on the mortgaged is lessening, although it does not stop. With just over 24 hours left until the end of the month of November, everything indicates that the reference index for calculating the interests of the vast majority of variable rate mortgage loans in Spain will close the month slightly above 4% after experiencing its biggest monthly drop in more than three years. Even so, those who review their monthly payment with this last information will have to face an increase that will be close to 100 euros in the case of the average mortgage.

The Euribor has fallen in November to a monthly average of 4.027%, more than one tenth below the 4.16% in October. Although the data is provisional – in the absence of knowing what level the indicator will be at this Thursday, the last day of November – it is not expected to vary significantly, except for a major surprise.. In this way, the Euribor has broken its upward trend, which in recent months had led it to stagnate at around 4.1% with an increasingly slower growth rate.

The fall in November not only represents a change in trend in the evolution of the Euribor, but also represents its largest fall since July 2020, when the index went from -0.15% to -0.28%, still negative and affected by the economic stoppage of the pandemic. This is the second monthly decrease recorded by the Euribor so far in 2023. It already decreased in August from 4.15% to 4.07% after more than a year and a half of consecutive increases.

“With the return of summer, the trend has changed and we are returning, little by little, to a certain level of stabilization of the Euribor,” explains Simone Colombelli, mortgage director of the mortgage comparator and advisor iAhorro.. “It is likely that it will end this year around 4%, up or down, and that it will move between 3.75% and 4% throughout the first half of 2024,” predicts Miquel Riera, an analyst at HelpMyCash. “It is also not ruled out that it could fall to 3.5% in the most optimistic scenario,” he adds.

Despite the decrease, the mortgage payments that are updated with the November data will increase, since the index is higher than the 2.828% recorded a year ago. For an average loan of 150,000 euros for 30 years and with a spread of 0.99%, the update will cause the monthly bill to go from 691.35 to 790.81 euros, which will mean an average increase of 99.45 euros per month. month. In the case of a mortgage of 300,000 euros with the same conditions, the increase would reach 198.91 euros, going from 1,382.7 to 1,581.61 euros.

These increases are less than last year, but it rains in the wet, because the increases accumulate. The November review implied in 2022 an average increase of 242.37 euros for a mortgage of 150,000 euros and 484.74 euros for one of 300,000. In this way, in two years both assumptions respectively accumulate an average increase of 341.82 and 683.65 euros.. “We do not expect decreases in the mortgage payments in the short-medium term; what is more likely is that the increases in payments will be smaller than last year,” says Estefanía González, spokesperson for the mortgage advisor Kelisto.es.

At the moment the Euribor has broken with the forecasts that indicated that it would approach 4.5% throughout 2023. In fact, the daily data has dropped by 4% this Wednesday. Specifically, it stood at 3.983%, a level that is far from the annual highs recorded in September, when it reached 4.23%.. However, analysts urge caution.. “This trend is striking, but we should not give up. It is good news, that is clear, especially for those with mortgages, but it is still too early to say that the Euribor is not going to rise again. In fact, it is likely that it will,” says the mortgage director of iAhorro.

The indicator used as a reference in the majority of variable mortgages reflects the change in tone of the European Central Bank (ECB), which in October took its foot off the accelerator after ten consecutive increases in interest rates. The institution chaired by Christine Lagarde left the official rate at 4.5%, an unprecedented level since the entry into circulation of the euro. However, the monetary authority has already warned that rates will remain high for as long as necessary in order to return inflation below 2%. “While waiting for what happens at the next ECB meeting, on December 14, it seems that the markets are already discounting that there will be no future rates in the short and medium term,” says González.

The rise in the Euribor in the last year and a half—in which it has gone from negative rates to exceeding 4%, thus reaching highest levels since 2008—has contributed to cooling the housing market. According to the latest data released this Tuesday by the National Institute of Statistics (INE), the mortgage firm fell by 29.6% in September compared to the previous year, accumulating eight consecutive year-on-year falls.

The OECD, an organization made up of mainly high-income countries, recommends that the Government launch a fiscal adjustment plan as soon as possible to redirect the situation of Spanish public finances.. The organization believes that Spain needs to undertake a “strong” and “sustained” fiscal consolidation to keep the debt on a downward path and thus be able to generate room to assume the increase in spending linked to the aging of the population or undertake transformative investments that drive growth. .

This is what the economists of the Paris-based institution point out in their fall macroeconomic projections report for 2024 published this Tuesday.. The OECD sees the need for a more ambitious fiscal adjustment than the one the Government has hinted at so far.. The organization believes that with the measures on the table the public deficit would fall to 3.2% of GDP next year, still above the limits allowed by Brussels.

In this way, the organization joins the call to tighten the belt that has already been raised by the IMF or the European Commission itself in view of the return to fiscal rules next year after four years of suspension.

Adjustment recommendations for European countries have been taking place in recent weeks. The deteriorated appearance of public finances in the Old Continent after the pandemic and the war in Ukraine have left several Member States, including Spain, in a difficult situation.. The latest to have problems has been Germany, champion of fiscal discipline, which has even had to suspend constitutional limits on debt to face a budget crisis.

In Spain, the Executive has sent to Brussels a budget plan for 2024 in which all anti-crisis energy support measures decline, while in the expenses section free state public transport is maintained, the revaluation of pensions is included and the increase in the salary of civil servants.

However, the Government has only just started the budget process and no member of the Council of Ministers has yet closed the door to extending any of the measures that expire in December.. In fact, Pedro Sánchez himself announced during his investiture session that he will extend the VAT reduction on certain basic foods until mid-2024.

Furthermore, it is far from clear that the Executive will be able to carry out public accounts for 2024.. First, the coalition partners will have to agree; Then they will have to be able to convince five nationalist political forces of different political stripes (ERC, Junts, EH Bildu and PNV) and, if that were not enough, they will have to be able to overcome the more than foreseeable PP veto on the spending ceiling in the Senate.

Less growth in 2024, but above the eurozone

Regarding economic growth, the OECD forecasts GDP growth of 2.4% in 2023, which would slow to 1.4% in 2024. The forecast of the Paris-based organization is more pessimistic than the one it presented almost three months ago. The growth forecast for 2024 has been lowered by half a point and is distanced from that of the Government, which expects a GDP increase of 2%.

Even with everything, Spain would be one of the countries that would grow the most in the euro zone in both 2023 and 2024. The OECD predicts that the euro zone economy will barely advance 0.6% this year and 0.9% next year. Among the large euro economies, Germany will suffer a contraction of 0.1% this year and will only grow by 0.6% in 2024. In the case of France, GDP will rebound by 0.9% this year and by 0. 8% next year, while in Italy the economy will grow at a rate of 0.7% both this year and next.

As most analysts point out, the only engine that will move the Spanish economy in 2024 will be domestic consumption, which should be boosted by the recovery of purchasing power caused by the fall in inflation and the rise in wages. European recovery funds will also play an important role, which should sustain investment over the coming years.

The Ministry of Labor has revealed this Wednesday the main lines of its plan to reform the unemployment benefit system, the aid received by the unemployed who have already exhausted their contributory benefit.. The department headed by Yolanda Díaz proposes expanding the coverage of aid to those under 45 years of age who do not have family responsibilities, simplifying access or eliminating the waiting period of one month to collect it, according to Labor sources.. From the second vice presidency, they insist that the proposal goes “in the opposite direction to those who propose cuts”, a dart directed at the Ministry of Economy led by the first vice president, Nadia Calviño.

Furthermore, Díaz's proposal also seeks to make it easier to make aid compatible with incorporation into the labor market during the first month and for file reviews to be quarterly, according to the aforementioned sources.. The Ministry of Labor is finalizing the draft of the reform, which it hopes to bring to the Council of Ministers “as soon as possible.”

The reform has become a new reason for dispute between the two economic souls of the Government. The second vice president has surreptitiously accused Calviño of wanting to cut benefits and has claimed the competence of her ministry in this matter.. “We have learned about the Economy proposal and we show our absolute disagreement,” Díaz said this Wednesday before journalists gathered in the Congress courtyard. “I guarantee that we are not going to promote any cuts,” he added.

The second vice president has defended that this is a reform that aims to “gain rights”, expand subsidies and eliminate bureaucratic aspects to improve the quality of provision.. “The Government is not going to cut the unemployment benefit: it is going to improve and modernize it, working people can rest assured,” he concluded.

Discrepancies with Economy

The legislature has begun with swords raised between Calviño and Díaz, who already left notable clashes during the previous Government in matters such as labor reform or the increase in the minimum wage, where the initiative is taken by Labor.

The Ministry of Economy has not openly presented a specific proposal, but some information known in recent weeks suggested that Calviño's department wants to move towards a decreasing subsidy model – higher at the beginning, but which would be reduced as time passes. months-.

Economy sources consulted by 20minutos indicate that the ministry “is aligned” with the proposal that Labor has advanced this Wednesday. “Ultimately, what we want and share is that the entire system is aimed at supporting employment,” they point out.. Calviño's ministry adds that the two parties continue to exchange documents and work at a technical level to close the reform as soon as possible.

Last Monday, the Secretary of State for the Economy, Gonzalo García, gave some more insight into the position of the first vice presidency.. At an informative breakfast, García pointed out that the reform should focus on promoting compliance with the activity agreements made by the unemployed with the Public Employment Services.. These activity agreements are the pact that the unemployed person reaches with the administration in which he or she undertakes to actively look for work and accept offers that suit their profile.

García claimed that there must be “reciprocity” between the support that the administration provides to find employment for these people and “the active search for employment and the acceptance of appropriate offers,” which are required of recipients of aid.. The Secretary of State defended that the system must take into account “the shortage” of profiles in “many sectors” of the Spanish economy. In addition, he pointed out that the minimum vital income incorporates “social protection elements” that cover needs that previously depended on these employment subsidies.

According to the latest available statistics from the Ministry of Labor, there are currently 710,622 people who receive some type of unemployment benefit after having exhausted their contributory benefit.. Of them, the majority are unemployed over 52 years old, who have particularly difficult employability and often accumulate long periods of unemployment.