Almost half of businesses in Spain have hiked prices in 2023, survey reveals
Nearly half of companies in Spain, 44 percent, have increased their prices from January to March 2023, and slightly more than half plan on doing so sometime before the end of the year, according to a new survey carried out by the Bank of Spain.
A total of 15,000 companies took part in the survey.
According to the banking supervisor, this is down to “an increase in inflationary tensions”.
Analysts from the Bank of Spain say that for many industries the price adjustments for the rest of the year are concentrated in the first few months.
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The rise in prices has been seen in all sectors, although it has occurred “with more intensity” in services such as information and communication and administrative services.
Most companies, however, expect the situation to improve considerably in the second quarter. By then, the proportion of firms that expect to raise sales prices is reduced to around one in three or 35 percent.
“The current and expected increases in sales prices continue to be lower than those registered in the cost of intermediate consumption,” the Bank of Spain has indicated.
This means that most companies say their production costs have risen above the prices at which they sell and believe their increases are justifiable. Specifically, seven out of ten companies state that their production costs continued to rise during the first quarter of 2023, although signs of relief are beginning to appear.
The percentage of firms that say they have suffered a “significant” cost increase has been reduced by 10 points compared to the previous edition of the survey last year.
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Three out of four firms or 74 percent believe that labour costs will also increase in the coming months.
According to the Bank of Spain “a certain lag in the transfer of inflationary pressures to labour costs” is taking place.
The results of the Bank of Spain survey are consistent with the latest Consumer Price Index readings (CPI) published by Spain’s National Statistics Institute (INE) in January and February.
The first two months of the year saw small increases in inflation measured in year-on-year terms despite the introduction of measures such as the VAT reduction on certain basic food products.
According to several experts, the CPI for March, which will be published next week, will be key to having a more precise estimate of how prices will evolve for the rest of the year.
The main reason for this is that in March we will begin to see the effects of a whole year since Russia invaded Ukraine. From then on all year-on-year comparisons will be between months when the war had already begun. Although Russian troops entered Ukrainian territory on February 24th 2022, the first full month in which the consequences of the conflict were felt was in March.