Meat stall at a Mallorca market

Inflation obviously impacts consumer spending.

15-01-2022Toni Planells

The Consumer Price Index (CPI) for the Balearics in December was 6.5% higher than twelve months previously, the highest rise for thirty years.

As elsewhere, prices started to rise in the second half the year and continued to do so, economist Antoni Riera suggesting that it was known that inflation would reach or top five per cent by the year end.

The director of the Fundació Impulsa points to various factors - the interruption or cutting of supply chains because of the pandemic; geopolitical tensions making energy more expensive; and a rebound of the economy. The recovery process started in the middle of 2021 and demand increased considerably.

"These factors trigger prices." Electricity, gas and other fuels were the products that became most expensive in December - by almost 61%. The price of electricity on the free market is at record highs, and this affects consumer spending.

However, inflation has not only been noticeable in energy. Many of the products which contribute to the CPI calculation have risen in price and quite considerably, e.g. fresh fruit These price increases mean a loss of purchasing power, with collective bargaining agreements having led to a 2.82% rise in pay. Well below inflation, this increase is nevertheless the highest in Spain.

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