Purchase Power Loss Lower in Spain

Every day, it seems as if the cost of living is increasing, when looking at your grocery bill, you may notice that you are getting less and less for your money. However, according to the OECD, the Organization for Economic Cooperation and Development, though the value of real wages decreased by 1.2 per cent due to inflation in 2022 and the first quarter of 2023, Spain is not suffering as badly as other major European economies.

The latest data from the OECD shows that Italy is suffering a loss of 7.3 per cent, while in Germany, the purchase power levels have dropped to 3.3 per cent. France has seen a reduction of 1.8 per cent. Overall, OECD countries have felt the blow of a drop of 3.8 per cent in purchasing power. Nine out of ten Europeans say that increased prices are now a fact of life, and they are starting to feel the effects of recent events, including the Russia-Ukraine war.

In 2022, wages in Spain suffered a devastating blow, however, salaries are on an upward trend, with an increase in wages of 3.8 per cent from the beginning of 2022 until March 2023. Inflation has fallen faster than in the rest of the European Union, falling below two per cent in June, according to the CPI (Consumer Price Index).

A recent increase in wages is due to the Union and employers agreement signed in May for a forecast of a four per cent increase in salaries in 2023, three per cent in 2024 and another three per cent increase in 2024.

Other measures which helped to ease the situation in Spain included the introduction of Governmental measures to subsidise the price of petrol, free public transport, tax reductions and a 200 euro check from the government for those on low incomes. All these measures are believed to prevent a drop in household spending, ensuring that Spain is still doing better than its European neighbours, despite everyone feeling the pinch.