Half-point inflation rise spells €3bn pension payout
30 November 2008, Madrid - Spanish consumer prices jumped half a percentage point in November, bringing the year-on-year inflation rate to 4.1 percent as rising fresh food prices and rocketing fuel costs dug deeper into consumers' wallets.
30 November 2008
Madrid - Spanish consumer prices jumped half a percentage point in November, bringing the year-on-year inflation rate to 4.1 percent as rising fresh food prices and rocketing fuel costs dug deeper into consumers' wallets.
Advance figures presented Thursday and based on harmonized data for the EU showed that inflation has reached its highest rate since May 2006, a trend Economy Minister Pedro Solbes admitted is "not good."
November inflation figures are used in Spain to calculate annual pension reimbursements based on the deviation of real inflation from the government's 2 percent target. The 2.1 percentage point differential this month, if confirmed when full figures are released on December 14, will mean the government has to compensate pensioners to the tune of €3 billion in January. For the differential recorded in 2006, the government paid out €
"We were expecting inflation of around 4 percent... and we know it will remain at a relatively high level over the coming months," Solbes told reporters in a press conference.
Opposition Popular Party leader Mariano Rajoy, who is expected to place economic issues at the heart of the March 2008 election campaign, described the trend toward sharply higher prices as deeply worrying. "Inflation is the biggest tax that low-income members of society have to pay," he said.
Higher fuel prices due to record increases in the price of oil globally are one of the main factors driving inflation, with the cost of gasoline and diesel having risen by 14 percent and 18 percent, respectively, since the start of the year.
The price of fresh foods, especially basic items such as bread, chicken, milk and eggs, have also shot up in recent months as the price of grain has risen.
EU statistics show that Spain has suffered the sharpest fresh food price inflation in the 27-nation bloc, although the government has put this down to Spain's high economic growth rate.
"It's logical that as per capita income rises so too does the price of food," Ignacio Cruz Roche, an Industry Ministry spokesman, argued yesterday.
[Copyright EL PAÍS, SL. 2007]
Subject: Spanish news