The Bank of Spain blames oil for half of the meals CPI hole with Europe: “We consume more and it is one of the goods that increases the most” | EUROtoday

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“We are consuming more, precisely, the goods that are increasing the most, and we can single out one: olive oil.” The common director of Economics and Statistics of the Bank of Spain, Ángel Gavilón, defined yesterday on this means the rationale why inflation usually, and that of meals particularly, is greater in Spain than in Europe. “Not only do we consume more than in Europe, but it is one of the goods that has increased the most and explains half of the differential,” he insisted, in reference to the constructive inflation hole that Spanish households endure in comparison with European households.

The group, within the replace of its macroeconomic forecasts that it offered yesterday, explains that “since the end of 2023, Spain has presented a positive inflation differential with respect to the EMU [Unin Econmica y Monetaria] that comes from the energy component and food.” And within the case of meals, this example “is explained, to a large extent, by the greater weight in the consumption basket of Spanish households of the foods that have become more expensive.” just lately.” Especially, oil, which is a basic good in Mediterranean delicacies.

The supervisor's forceful estimate is reflected in the monthly data from the National Institute of Statistics (INE), which has been showing a much higher growth, by far, of olive oil inflation with respect to the general CPI and that of food for some time. more than three years now. But the difference has skyrocketed especially in recent months, when the inflation of liquid gold has reached 70% in annual rate, compared to a food CPI of 4.7% and a general rate of 3.6%.

This gap justifies the organization's assertion that olive oil prices have increased its weight in the Spanish shopping basket and this has widened the gap with neighboring European countries.

A few months ago, consumer associations such as the OCU or Facua denounced that the price per liter of olive oil in Spanish supermarkets was much higher than in countries like Portugal (27% more expensive), France (16%) or Italy (6%). The reason for these differences, Spain being the world's main producer of olive oil, is found precisely in the statement that Ángel Gavilón made yesterday: we Spaniards consume much more than other European citizens.

Specific, In Spain, 11.4 liters per year are consumed per person, compared to 7.1 liters in Italy, 5.8 liters in Portugal or 2.1 liters in France, according to data managed by the International Olive Oil Council. This implies that the turnover on supermarket shelves in neighboring countries is much lower, because they buy it less, so that prices do not suffer the immediate impact of the increases that they do experience in Spain due to the greater turnover of the product. .

Withdrawal of the VAT reduction

Beyond olive oil, the situation for families could worsen when shopping at the supermarket if the Government does not decide to extend the VAT reduction on basic foods. Given this probable scenario, the Bank of Spain warned yesterday that if the tax rises again from July 1, it will exert some upward pressure on these prices in the second half of the year.

All in all, the agency estimates that food inflation will decrease from an annual average of 11.1% in 2023. up to 4.5% in 2024 and up to rates around 2.5% in 2025 and 2026. An evolution that is consistent with the prices observed in the markets for different raw materials and with the marked slowdown that food prices have been showing in recent months in the initial stages of the production process. In any case, the slowdown in prices will show some ups and downs in the coming months and the decision made by the Government will impact the pocketbook.

Regarding the forecasts for general inflation, the Bank of Spain estimates that the CPI will be 3% in 2024, three tenths more than the last forecast; at 2% in 2025, one tenth more, and 1.8% in 2026, another tenth more.