If any economic indicator has marked this 2023, without a doubt, it has been inflation. And although the year started with almost 6% year-on-year increase in price, its end appears more positive with 3.2%, according to INE data at the end of November. A downward trend that will have to wait until the second half of 2024, since the first quarter will be marked by “a slightly upward path,” the Bank of Spain includes in its December forecasts.

Although there will be another issue that will define prices at the beginning of the new year. This is the possible withdrawal or extension of the anti-crisis measures implemented by the Government. While waiting for some details to be confirmed – presumably it will be next Tuesday after the Council of Ministers – it was previously announced that those relating to public transport will remain until December, while the VAT reduction on some foodstuffs will remain until June.. Unlike the tax relief for the cost of electricity, the withdrawal of which is scheduled for January.

This uncertainty also reaches the businessmen interviewed by the Bank of Spain, since they anticipate greater pressure on their intermediate costs, which in turn will have an impact on final prices.. EL MUNDO includes the main changes for 2024, which does not promise a new life, at least with respect to prices.

TELEPHONY

It is worth clarifying that the increases at the beginning of the year may respond to a calendar effect, since many companies change their rates for the new year.. This is the case of the operators Movistar and Vodafone. In the case of the first, the increase in price will take place from January 15 and will be between two and four euros depending on the client's rate.. An increase that will not be reflected in an improvement or a greater number of services, as criticized by the OCU.

As for Vodafone, the increase will be effective on January 1 and responds to the decision it made last year by which it established that its prices would vary according to the average interannual CPI.. This time it will mean an increase of between 0.70 and 4.30 euros over the current one.

The rest of these operators in Spain, at least for the moment, have not commented on changes in their prices.. On Digi's part, it should be noted that it recently lowered them, while Orange and Más Móvil, in the midst of the merger process, remain silent.

ELECTRICITY

The electricity bill has become one of the biggest headaches for many Spanish households since the war broke out in Ukraine. Although the price mitigation measures relieved many pockets, they are coming to an end.

Under the premise that the VAT on the electricity bill will once again be 21% – it was reduced to 5% – and the electricity tax will be 5.11% – it dropped to 0.5% -, the Bank of Spain predicts that the price of energy will become 15% more expensive by mid-2024. An increase that in turn is motivated by the prices of some energy inputs in futures markets where oil and natural gas continue above their pre-pandemic levels.

FOOD

Foods will also continue to rise.. Although in this case the economic supervisor defines the increase as “moderate”. He even talks about a slowdown after the anomalous increases experienced during this year.. Increases caused in turn by the increase in the cost of supplies and fertilizers.

Another reason that would cause this escalation to continue is the withdrawal in June 2024 of the anti-inflationary measure by which the Government reduces the VAT on essential foods to zero, and lowers the VAT on oil and pasta to 5%.. The moment it is eliminated, the pockets of the Spanish people will once again decrease in purchasing power.

However, there is another concern from the sector that would lead to an increase in prices.. These are the climatic conditions that are affecting some agricultural productions.. In fact, in July 2023, the Coordinator of Farmers and Livestock Organizations (COAG) warned of the “savage drought” that, in addition to aggravating the effects of the 2022 drought, endangers some 2024 crops.

LIVING PLACE

The real estate market will also experience a somewhat more expensive year, although yes, with a much more moderate increase that the experts consulted by Fotocasa Research estimate will not continue beyond the middle of the year, after closing 2023 with an increase of 5%.

The upward trend, however, will not be seen homogeneously between homes for sale and rentals, nor between new construction and used homes.. The rise, on the other hand, will not be the same throughout the territory “in line with the polarization […] between the great poles of business, tourism and economic attraction and the rest of emptied Spain”, assures Jesús Duque, vice president of Alfa Inmobiliaria. And in the first mentioned areas the supply is not enough and will cause prices to continue on the upward path.

The lack of new construction will also not allow downward changes in the prices of used ones, nor in rentals whose prices present upward forecasts higher than those of the general real estate market.. On this occasion, in addition to the lack of supply, the increase is motivated by high demand, since the increase in interest rates from the ECB removed potential buyers with less savings from the scene.. However, it should be noted that for contract renewal the landlord may not charge more than 3% of the price stipulated in the previous agreement, as limited by the controversial Housing Law.

INTEREST RATES

Given the interest rates that mark the price of mortgages, the questions are greater, since the ECB avoids talking about their possible reduction, and when they do, the answers are not very clear.. In fact, the organization has already indicated that its decisions will be “accommodative”, that is, they will adapt to the European inflation scenario, so it is still “premature” to debate the possibility of reducing them.

TRANSPORT

In this case the price trend will not have so much to do with the market, but rather with the Government. On the one hand, waiting to be confirmed, public transport will maintain the approved discounts during 2023. However, the fate of the tolls is much less clear.

When 2023 started and in order to relieve the pockets of the Spanish people, the Executive limited the increase in tolls by four percentage points, since according to the formula by which these increases were established since 2002 it would have been more than 8 %. Now the operating companies want to recover it, and after making their calculations they demand an increase of at least 4.03%. The ball falls once again in the Administration's court.

SALARIES AND PENSIONS

Prices rise, but wages will too, although not to the same extent. In line with the forecasts of the Bank of Spain, at least the negotiated salaries could register up to 3%, yes until 2026. The situation of the more than nine million pensioners in Spain will be more positive, among them retirees will see increases of 3.8%, while widowhood will increase by 14.1%. Throughout the year, in addition, the unemployed with subsidies will also see improvements in their income, as well as the self-employed due to the readjustment of contribution brackets.