The weekly shop is more expensive. M. CECILIO

Prices in Spain have risen by 9.8 per cent as a result of the war in Ukraine

The cost of electricity is twice as expensive as it was a year ago, fuel prices have risen and the Retail Price Index is at the highest level for nearly 40 years

Edurne Martínez

Madrid

Wednesday, 30 March 2022, 13:53

For months now, inflation in Spain has been running at a rate not seen for decades but figures released today, Wednesday 30, show that it has set a new record in March. The Retail Price Index has risen more than two points to 9.8%, which is the highest since May 1985, which was 37 years ago. The costs of electricity and fuel have risen the most compared with a year ago, but they are not the only ones to be affected.

The weekly shop is higher than a year ago but also higher than last month, when prices had already reached levels not seen in 36 years. In one month inflation rose by 3%, its highest monthly increase since 2002, with the impact of the Ukraine war as a backdrop, which has led to a rise in energy prices and many other products due to a lack of raw materials. In fact, the Ministry of Economic Affairs says that 73% of this increase is due to the impact of the Russian invasión of Ukraine on the prices of energy and unprocessed foods.

Package of measure

Prime minister Pedro Sánchez has admitted that an inflation rate of 9.8% is “bad” but says he is confident that the package of measures the government has just announced will help to stabilise the situation.

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The Bank of Spain had already warned on Tuesday that the inflation rate which was due to be announced on Wednesday was “particularly negative” and the governor, Pablo Hernández de Cos, described the war in Ukraine as an “energy shock” and said prices will stay high, although probably not as high as they are at present.

Inflation could reach two digits

Everything indicates that prices will continue to rise in the next few months, and analysts believe inflation could even reach two digits. The Retail Price Index has only been over 10% once, in 1984, as a result of the major energy and oil crisis in the preceding years, which pushed it to over 15%. At that time, Spain’s currency was the peseta – it would be another 15 years before the euro came into being – and the government decided to devalue it as a way of containing the seemingly unstoppable price increases.