Spain before and after the covid: hotels 44% more expensive; food, 27%, and gasoline, 18%

Inflation, the general rise in prices, is moderating in Spain, which means that prices continue to rise but at a slower pace. As confirmed on Tuesday by the National Institute of Statistics (INE), prices in Spain were 3.2% higher in May than those of a year ago, an increase lower than that registered in April (4.1% ).

Despite this slowdown, which will foreseeably continue in June to around 2%, food continues to present exorbitant price increases, of 12% last month compared to May 2022. Some products that are part of the weekly shopping basket of all families show very large increases: sugar is 46.3% more expensive than a year ago; butter, 25.2%; olive oil, 24.7%; whole milk, 24.3%; potatoes, 23.6%, and skimmed milk, 23.2%.

Processed foods are the ones leading the rise today (12.9% in May compared to 8.8% for fresh foods), hence core inflation -which excludes fresh foods and energy products- still stands at 6 .1%, well above the healthy level of 2% pursued by the European Central Bank (ECB).

The problem is that although the year-on-year rises are slowing down, inflation is accumulating and that, since the pandemic, families and companies in the country have had to assume an unprecedented price increase: already over 15%.

If the prices that exist today in Spain are compared with those that existed in the country in February 2020, just before the pandemic broke out, food has not stopped rising and has become more expensive in total by 27.2%; while alcoholic beverages and tobacco have increased their price by 12.2%.

There has also been a sustained increase in the price of hotels and other tourist accommodation, which accumulates a rise of 44%; while restaurants are today 13.2% more expensive than before the covid.

Electricity and gasoline, which suffered a supply shock after the outbreak of the war in Ukraine, recorded their highest increase in 2022 and are now on a downward path again, but even so, accumulate increases of 3.7% and 17 .6%, respectively.

In today's Spain, three years after the pandemic, what has risen in price the most is sugar, which is 52.5% more expensive than then (if it cost one euro per kilo, now it will exceed euro fifty); followed by the price of hotels and other tourist accommodation, which have risen by 44% (the room that in 2020 was 60 euros, will now exceed 86 euros); olive oil, which has shot up 40.4%; butter, with increases of 38%; sauces and condiments, which have become more expensive by 36.4%; potatoes 34%; eggs, 33%; and whole milk, 33%.

Despite the fact that food is what rises the most, both its level and its increase continue to be below the average registered in the European Union. In May, for example, in Spain they rose by 12.8% in harmonized terms -manipulating the statistics to make them comparable to the European one- and an average of 16.6% in the EU, according to Eurostat data.

moderation in sight

Although a drop in the year-on-year rate is expected for the next two months, coinciding with the holding of the general elections on 23J, subsequently the rise in prices will pick up again until the end of the year at around 5%.

“In June, the interannual rate of inflation will fall to 2% as a result of another important step effect, although it will later rise again until the year ends at 5%, with an average annual rate of 3.9% (since 4 % former). The forecast for the underlying rate is 6.4% (from 6.6% previously). For 2024, the expected average rates are 3.4% and 3.2% for the general and core rates, respectively,” Funcas said yesterday, warning that “the impact of the drought on food prices” is an upside risk.

In fact, Funcas forecasts that processed foods will maintain a 12% price rise for the rest of the year and that on average the year-on-year increase will be 13% by the end of 2023.. For fresh fruits, they expect a little more moderation and that the average annual increase is 9.5%.

“From February to May, inflation has shown consistent data with a decline that can be sustained over time, reaching averages of 3.4% in 2023 and 3.2% in 2024,” said BBVA Research in a report presented this Tuesday. , which includes the hope that inflation “converges to levels around 2% in 2024”.