Inflation is drastically reducing consumer purchasing power. | Archive

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Analysts in Mallorca are predicting a slowdown in economic activity from October and a "very worrying" situation caused by galloping inflation.

The technical director of the Fundación Impulsa, economist Antoni Riera, says that from October there will be loss of dynamism and a scenario of lower economic growth due to inflation. Economic indicators have been positive until now because of post-pandemic reactivation, but the current economic cycle is "progressively collapsing". For the winter, there will have to be policies to minimise the threats that are posed through a loss of purchasing power.

Economics professor at the University of the Balearic Islands, Pau A. Monserrat, and the Pimem federation of small to medium-sized business associations, both believe that the end of the bankruptcy moratorium will be a key factor. A pandemic measure, businesses have not had to file for bankruptcy. But this ends in September. Monserrat says that "we will now begin to see how many businesses were really unable to survive Covid".

He adds that inflation will affect the main tourism markets, Germany and the UK, and he anticipates a 2023 season that will not be as good as the current one. Accumulated savings and people's desire to travel after the pandemic have contributed to a good tourism season. But the situation will be different next year.

And as pay has not been indexed to inflation, this "means that people have lost a lot of purchasing power". This will be reflected after the summer in particular.