With the inflation, it cannot be said that it was a problem that was not seen coming. Although probably those who should have taken action on the matter did not believe that the price increase would end up being so serious, was minimized or there was not enough foresight. Either because few thought that the invasion of Ukraine became a reality and even less that it would end up leading to the war of attrition that it is becoming, either because the electoral calendar of the autonomous communities in Castilla y León and Andalusia turned inflation into an uncomfortable issue, the truth is that almost half a year has already passed since the CPI gave the first signs of alarm, and not only has the trend not stopped, but looks runaway. As the problem affects countries all over the world, and not just Spain, it would be inaccurate to consider it a miscalculation solely by the Spanish Government, but the singularities of the Spanish economy (with more unemployment and more public debt than other neighboring countries) required more anticipation. The failure of the social agents to reach an income pact (to moderate wages but also business margins) that would have alleviated the inflationary spiral added to the bad news.
May closed with an inflation of 8.7% in Spain, according to the advanced indicator of the INE. More worrying than this data is the Underlying inflation (which does not take into account the most volatile prices, including energy), which was 4.9%. In other words, it is no longer a problem concentrated in gasoline and electricity, and therefore more or less manageable, but extended to all services and consumer products. That which the statistics confirm is suffered every day by all the citizens of this country, but especially those with the lowest incomes, because they have less scope to reduce their expenses. And they will also be the ones who will suffer the most from the announced rise in interest rates with the rise in credits. The European Central Bank (ECB) has no choice but to raise rates to contain inflation, but that too will reduce consumption and will lead to lower economic growth. The most indebted countries will resist it worse than the most healthy ones.
The situation, therefore, can still be more complicated. So it is time to analyze whether the measures approved to date are being effective and sufficient. One of the most popular is the discount of 20 cents on the liter of fuel. Drivers have barely noticed it, because the aid has been practically absorbed by the unstoppable rise in gasoline prices. There is division in the Government on whether this subsidy should be reformulated, in order to concentrate fiscal efforts on those who really need it. A similar warning has been given by the International Monetary Fund (IMF) when he criticizes that general aid tends to benefit families with high incomes more (which in this case are those that use private vehicles the most) and defends selective policies. The example to follow are decisions such as the public transport voucher of nine euros per month approved in Germany, designed for the working class. Another of the star measures, that of capping the price of gas, was authorized this Wednesday by Brussels (three weeks after the decree law was approved) and is equally general.
Forecasts point to an economic slowdown. The State will allocate more public money to pensions and will have more difficulties to get into debt. Let’s forget the triumphalist speeches and let’s prioritize selective measures so that fiscal policy is truly equitable.