By Humphrey Carter
THE cost of living in the Balearics went up by 2.2 percent during the second term of this year with regional inflation running at twice that of the UK's.

The annual inflation rate in the Balearics is currently running at 3.3 percent, while last month in the UK, inflation rose to 1.6 percent, up slightly on May and at its highest level for nearly a year.

Last month, the Balearics suffered the biggest jump in prices, compared to May. Inflation for the first six months of this year, 2.2 percent, is well up on the 1.2 percent inflation for the first half of last year.

The hotel and service sector were hardest hit last month, with prices going up by one percent. But looking at the global economic picture, fuel and transport costs are to blame for the high rate of Balearic inflation.

During the first half of this year, transport costs in the Balearics have risen by 5.3 percent. Last month drivers saw the cost of unleaded petrol breach the one euro per litre barrier and obviously, extra transport costs hit consumers and industry where it hurts.

Yesterday, the Confederation of Balearic Business Associations, warned that unless the price of oil starts to slow down and balance out over the next few weeks, the Balearic economy and business is going to suffer.

However, as far as the unions are concerned, the Balearics is already suffering and the region's economic situation is “worrying.” UGT general workers' union secretary general Manuel Pelarda blamed the “runaway” price of fuel for continual rise in the cost of living in the Balearics. The situation appeared to have got out of the Spanish government's hands.

He called on central government to make a more concerted effort to either help ease the financial burden on consumers or try and control fuel prices.
The union is primarily concerned about low-earners and pensioners who are unable to keep up with the cost of living, especially in Spain's more expensive regions like the Balearics.

The retail sector, just a few days into the summer sales, was not impressed with the news yesterday, fearing that a rise in inflation will do little to boost consumer confidence in the Balearics.

Business, industry and especially tourism have complained that they are finding it increasingly difficult to compete on price, not only overseas but also domestically.

With the Balearic government hoping that domestic tourism will save the summer season, the tourist industry admits that attracting holidaymakers from the mainland, where the cost of living is much cheaper in general, is going to prove a tough challenge.

And while the hotel sector is trying to provide value for money, high inflation is making it hard to compete with the increasingly popular Eastern Mediterranean destinations.


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