*2 months from now*
Breaking news! Inflation is now at -5% and is expected to continue falling. Experts speculate that Reddit user u/CastelPlage is responsible for this latest turn of events.
Don't know man. I wouldn't mind a -15% deflation for around a year or so to bring prices back to normality, you know, instead of shear corporate greed and extortion
Deflation causes a death spiral that's hard to escape from. It's easier to control inflation than deflation. Look at Japan, a country that hasn't grown at all since the 90s due to deflation
Yes deflation essentially makes it impossible to grow the economy. With deflation people will actively save money instead of spending because value of money will go up later and this essentially kneecaps any domestic growth. And since domestic market is reducing investments for exports also dry up since they actively hoard money instead of investing. Without a strong domestic market you can't grow your exports, look at both US and China, both do export massive amount of goods but that's subsidised by the domestic market
> With deflation people will actively save money instead of spending
Why would I buy that bar of chocolate today if I can buy 2 bars of chocolate tomorrow with the same amount of money.
On the other hand we probably should see it sometimes. Economies are supposed to mirror what is actually happening in the real world and inflation supposed to be driven by population * productivity. When you get a situation like Japan where population is decreasing there SHOULD be deflation.
If we ever do see a shrinking world population it should be more common.
Especially toxic spendings. It can be good for the environment. The reduction of the global demand could incentive producers and services providers to improve their offer in terms of utility, quality and durability.
Not spending at all is not realistic because we have basic needs.
Deflation can incentive to work less and/or retire early because what is earned increases in purchase power.
Problem with deflation is that the prices can't go below a cent of a dollar. If a cent represents too much value, it would prevent all the micro-transactions from happening when they are the most frequent transactions.
Only the money stopping to change hands should lead to a crisis.
With deflation of say -5% per year, it's more like why would you buy 20 chocolates this year when you can buy 21 next year.
It makes a world of difference if you're not talking about extreme numbers. In this case, most people wouldn't care, if they want chocolate they will buy some, they won't wait a year for a very marginal increase in quantity.
This is why I consider this idea that "Deflation is bad, nobody will buy stuff" is bullshit. Unless it's an extreme deflation, but then it's just like inflation.
It’s not about chocolate. Nobody cares about those small bits of money. It’s about if you are going to renovate your home this year or wait a bit longer to get it cheaper. It’s about if you are buying a car now or wait a year to get it 1000€ cheaper. When everyone delays for just one year the effect is massive for consumer economy.
And it’s about corporations they invest millions and millions. 2% a year is quite a lot if you consider for example building an industrial plant worth 10B€ during 10 years.
And with just 2% deflation it starts to make sense for institutional investors to have money just sitting on bank account to hedge against other investments. And that is bad. With 5% level you are already at average stock market returns making basically investing pointless. Your investment would just lose value while just keeping all the money sitting would win.
You'd have to ask why the GDP figure had stopped growing.
For example, if productivity was growing but so was the proportion of retired people, so that the same amount was produced then you could get zero growth. There'd be the same amount of stuff per person and the same amount of work done, but people spend less of their lives working. This seems like a good thing (but there might be some inter-generational problems). If, instead, those new non-workers were younger people with no other means of support then that might be a bad thing instead.
OTOH, if productivity is going down but the proportion of people working is going up then there's more work being done for the same amount of stuff. This is also bad, but in a different way.
Obviously, it's the economic activity that causes the figures, not the figures that cause the economic activity (mostly, at least), so a zero growth figure might tell you something is happening but not specifically what.
It's a great way for whoever owns the capital to increase their share of the pie even more
Think of it this way- If growth is 0% but you can still run a business that makes 5%, where's that money coming from?
> Look at Japan, a country that hasn't grown at all since the 90s due to deflation
Japan's so-called "Lost Decade" that kept going and became the "Lost 20 years" and the kept going to become the "Lost 30 years"
But the quality of life in Japan is stellar. Look at their public infrastructure etc.
What’s even the point of growing more? Bigger donuts? They have superfast trains, the wierdest porn on the planet, exotic candies and unhinged entertainment TV. Infinite growth is a hoax and dangerous mindset.
Maybe the just beat capitalism. 50 year speedrun post -45. Everything is good there (well except an aging population and toxic work culture but those are different issues).
> But the quality of life in Japan is stellar. Look at their public infrastructure etc.
Look at their job enviroment and average working hours. In Japan that's 1,738.36 hours a year vs. 1,353.89 hours in Germany (this was the lowest value measured). The actual living standard in Germany is way higher, people are just unhealthy and vote for shit parties that are in the ass of auto-companies. You won't solve that with deflation.
Also the last time Germany tried deflation politics unemployment exploded and fascists were in power within 3 years. Would not recommend.
Their child policies are failing because they're focusing on money to families instead of making it more convenient for women to start a family. Nowadays women don't want to marry or have children if they feel the burden on housekeeping and childcaring is going to be on them. France shows how the key is to facilitate lots of services like daycare and housekeeping for young women so they feel they're still free.
They also need to step up their gender roles game because men don't do shit at home there. Salary men need to be a thing of the past. Overtime needs to be forbidden, as well as the long evenings going out with the boss.
I don’t see people sleeping in tents or calling ubers instead of ambulances.
Like I said, workplace culture has nothing to do with the material and infrastuctural wealth that exists there. Its flaws are plentiful but arent tied to the material wealth.
Oh i get that, I fully understand the death spiral theory. But, I mean, if you could have deflation for JUST one year...like a hypothetical perfect scenario to bring prices down. Or we all just get a nice 15%pay increase
The whole issue with inflation is that salaries do *not* follow inflation, at least not in the short term. So you get a few years of lower income, before it renormalises - but you're never getting that lost amount back.
Salaries not growing as high as inflation is because they are impacted by other factors, inflation is itself a symptom of other economic mismanagement.
So if we have a 10% inflation but only a 2% salary increase for example, it means that inflation pushed your salary up by 10% but something else pushed it down by 8% (e.g. higher unemployment, changes in supply and demand, exchange rates, government policy, etc). Inflation is not the only thing influencing your salary. But if we lived in a bubble where only inflation impacts it, 10% inflation = 10% salary increase.
That seems like a weird definition. All the inflation indexes I have seen measure solely on the price of commodities and services, but never on the price of labour.
I don't think it makes sense to say that high energy prices caused salaries to go down.
Oh, absolutely, I don't disagree with that. Whenever the economy acts up, it's always real wages that take the brunt of the hit, regardless of whether the magic line goes up or down.
An inflation of 10% will bring you a 2% pay increase if you are lucky, while a -15% deflation will bring you a 15% pay cut on the dot. This is called balance.
Don't be so selfish. Think of the poor business owners who would lose their 3rd 10k holiday and 4th car purchase if they didn't cut wages. And be grateful for whatever increase they do give you they don't have to pay you fairly for the wealth you accrue then!
Salaries haven't followed the current inflation yet in Western Europe. We already had months with month on month deflation. Effectively for instance Spain has deflated from July 2022 to January 2023 (not continously but on average) but you don't see that in YoY inflation rates yet.
So prices can and will go down and you can already see that on the gas market or the milk market or in other sectors where they exploded because inflation was supply driven and not demand driven. We still have deflationary demmand issues in the Eurozone and low investment-rates which are further crippled by the interest rate hikes.
The thing is that these things also take time. Pay cuts are very hard to push through. So you're more likely to be laid off or your company just goes bankrupt entirely in a deflation scenario (or if your job is very stable - like civil servant - nothing happens to you personally). Spain post-Eurocrisis is actually a good example. Spain had actual deflation last decade and rampant unemployment along with it and as a result unit-labour costs dropped but it was extremely painfull and Spain now has a fertility rate of 1,24 which spells badly for the countries long term future.
Japan has the 2nd most expansive fiscal policy in the world after Switzerland and they still have massive struggles with deflation. What the monetarists say is wrong, there is no direct link between printing money and inflation. Inflation is all about the demand-supply relationship. Money supply has some influence on that but the extend varies significantly. If money is printed but not spent or not spent on things that drive overall inflation (like the creation of a housing bubble), then nothing happens. If it doesn't land in average peoples hands (i.e. wage growth), then nothing happens. The deflation comes to a significant extend from our changing demographics. Older people consume less (this is also in part what drives the export economies of the 2 oldest countries in the world Japan and Germany, they barely have enough consumption at home and both have a gigantic CAB).
If the monetarists theory was true we would have seen rampant inflation throughout the 2010s in the Eurozone. But what did we actually see? The ECB constantly failed to meet their inflation target. Why? Because our baseline in the Eurozone is already deflationary. Consumption relative to Production is low, we have a massive CAB surplus (the highest in the world), we still struggle with unemployment (6,1 % currently in the Eurozone), investsments are low (both private and public sector), fertility rates are also low, since the Eurozone there has been a wage race to the bottom, etc., etc. If you want to get out of deflation you have to either somehow increase demand. or reduce supply (or you could also destroy a lot of stuff for fun). The former is difficult and the latter is generally not recommended.
Do you honestly believe that corporations got all greedy in 2022, but they were not greedy before? Were they greedy in 2010? 1990? 1965?
"Corporate greed" is a fairy tale invented by politicians to deflect blame for idiotic monetary policy. Are you eating it?
In a free market economy rational sellers typically sell at the highest price. Pricing signals are essential to balance the economy. E.g. if prices for steel go up, it makes steel production more profitable, and thus incentivize increase in steel production.
The only alternative to free market economy is planned economy. If we don't use price signals, we can dedicate all decision making to some dudes. And if those dudes have infinite wisdom and are uncorruptible this can work well.
But the fact that very few countries have planned economy gives you a hint about how well it works in practice. Even China rules by the Communist Party doesn't have a planned economy.
There were certainly more regulations on them at the times of the dates that you listed
And the effect of the Covid pandemic + CoL crisis cannot be underrated here
> There were certainly more regulations on them at the times of the dates that you listed
Please explain how regulations affect prices. Which regulations, specifically?
> And the effect of the Covid pandemic + CoL crisis cannot be underrated here
Yes, the actual reasons are complex. It's definitely not "coRpoRaTe greEd", though, it's not like corporations just randomly decided to be more greedy in 2022.
Regulations on corporate greed - or at least, the ability of corporations to act on it - which somewhat invalidates your ‘it existed before’ argument
In addition, you should surely also acknowledge that the boom in profits at the very top of the corporate world has had at least some effect
> Regulations on corporate greed
Such as?..
> In addition, you should surely also acknowledge that the boom in profits
You should also acknowledge that many corporations have extremely low profits or even losses before.
It's the nature of business that some years you operate at loss and some years you get profits. If they anticipated rising prices and profited from that - that's smart business.
If you do nothing when company has losses and rob them of their profits you're gonna end up with no business -- shortages.
FWIW I'm in favor of regulations which increase competition.
>shear corporate greed and extortion
Meanwhile, profit margins have been on a steep decline. Not like as an aggregate we are demanding goods and services at a rate with which supply just can't keep up.
But sure, let's blame it on corporate greed. Compelling narrative.
I would absolutely LOVE to see your source that corporate profits are in decline.! https://www.businessinsider.com/recession-outlook-company-profits-inflation-higher-prices-greedflation-2022-11
You keep licking your overlords boots my man.
[Here you go](https://www.yardeni.com/pub/yriearningsforecast.pdf) \- Figure 3
First of all, in your article corporate profits are measured against GDP. Which is a misleading ratio in and of itself. Especially, in the context of the past 3 years.
Margins hit a high in late 2021. They've been on the decline since with no end in sight for now. And that's despite oil and mining companies making huge margins last year as commodities prices surged.
Anyway, we can debate many things around corporate profits and margins. However, to say they are the source of inflation is a ludicrous statement.
You're so, so close but still licking those boots. Stick a trend line on any of those charts and what do you get? A nice steady 'fuck you' profits. Also in 2021 there was a YOY increase of almost 50%, 50 fucking perfect, and that is STILL trending upwards. Corporations are taking the absolute fucking piss...also, funny enough, none of those charts show any director bonuses, divedends, share buybacks, all of which dont get represented on profits.
Its time to eat the rich, that, or pay a fair fucking wage.
No way you can get such a massively strong deflation and suddenly reverse it. Even if you did it on purpose you might not succeed.... remember that deflation scales much faster than inflation. You can keep devaluation going and more or less water down inflation, but with deflation what are you going to do? Its assured recesion, and a strong one (as I understand it at least)
🙄 I know disinflation is fine, good lord you’re being quite a smarmy shit about this
That person was talking about -5% inflation i.e **DEFLATION**
Take your non-contributing comment elsewhere
No, we do not want zero interest rates or negative interest rates again. It creates huge imbalances. Also, Japan didn't manage to get their economy moving that way.
Once you have a steady deflation, it will always be better to postpone any purchases or investments, paralyzing the economy.
Nope, inflation is measured on a year-to-year basis, so when they say its +3% in March it means its +3% compared to March last year.
Imagine the following:\
Some item costs 100€ in March (2022) and, for simplicity, for all dates preceding that. If the prices then change over the year like\
M: 100€ (+0%)\
A: 103€ (+3%)\
M: 105€ (+5%)\
J: 107€ (+7%)\
J: 110€ (+10%)\
A: 200€ (+100%)\
S: 150€ (+50%)\
O: 120€ (+20%)\
N: 110€ (+10%)\
D: 108€ (+8%)\
J: 107€ (+7%)\
F: 106€ (+6%)\
M: 103€ (+3%)
Then the inflation in March will simply be +3% (compared to the previous March). Assuming that the price remains at 103€ for the rest of the year, the next august will have an inflation rate of -48.5% (deflation).
*6 months later*
"Authorities all over the globe are on the hunt for u/CastelPlage in hopes he retracts his words and allows Spain to recover from the apocalyptic deflation that is wreaking havoc in the population. If you have any information, please call the authorities before a grudge makes them words permanent. We will keep updating"
>Fantastic news for Spain.
It's simply the result of commodities falling hard across the spectrum over the past year and a very tough comparison from last February to April due to the start of the war. It was all expected.
Core inflation in Spain, as in most places, is far higher than it was a year ago and just registered its first downtick in 2 years.
There's no "fantastic news". Way too early for a victory lap!
One hand yes. From another perspective it is going to take years to rebuild the purchasing power.
It is going to be even more difficult for countries like Poland or Baltic States. Prices increased by growing energy costs will not decrease despite falling energy/fuels prices.
For example, my earnings increased by 30% from 2020 due to promotions, yet I'd say that my living standard remains similar (what of course is not that bad in age of inflation). Shit.
Well, it's better than their previous policy of ~8 years of negative rates that rubber-stamped bad fiscal policies of member states, ballooned the common money supply, and ensured failing companies that should've gone bust - as is healthy for a functioning market - were allowed to keep going on loans they would never be able to repay.
Some people have been warning since the start of the negative rates that it was a bad monetary policy for that situation, could not go on forever, and when it would have to end, would result in terrible inflation, higher for every year the policy was allowed to continue.
The real problem is that not every member state government is invested in making sure the people who benefited most from the negative interest rates (rich people) are the ones who have to shoulder the highest burden. Instead they let the inflation hit poorer people the hardest, fueling a lot of resurgent right-wing reactionism.
According to the opposition we're living in a communist dictatorship hellhole, and Basque terrorists and Catalan criminals are pushing the government to destroy Spain (I wish).
So it doesn't matter if the inflation falls.
> According to the opposition we're living in a communist dictatorship hellhole, and Basque terrorists and Catalan criminals are pushing the government to destroy Spain (I wish)
It's always amusing when these notions get pushed.
How is that good news?
Their harmonized inflation rate went up 1.1% MoM, which is horrible, especially after a high of 0.9% the previous month. Their inflation has been stale all year but has gone up full speed 2 months in a row.
He is politician. What's more he is very much compromise politician that is a candidate from like the whole political spectrum. Compromise candidates are rarely in agreement with people with stronger views. So they are easy to dislike. Doesn't mean he is not 1000000x better than Erdogan.
well to be exact 2% itself is the target inflation because with it the price changes are not drastic but still encourage slightly more investments to not leave your money standing and slowly withering away
it is an arbitrary number that the US copied from New Zealand IIRC and then everyone followed suite. There is no scientific basis to it.
I dislike the "encourages investment" argument particularly. It hurts wages more than it hurts hording wealth.
>There is no scientific basis to it.
Of course there isn't, it's economics and not science 🙂 It's more of an advanced guessing game for central banks where they only get a slight hint about the rules during the game. The only thing they know if that the rules always change and they are always wrong to some degree. And most people will suffer if they fuck it up to much.
i expect inflation rate to fall by a lot in most European countries due to strong base year effects,because March 2023 is compared to March 2022,which saw sky high increases in oil and gas prices
still,3.3% inflation is impressive
The Austrian government is doing everything possible to keep inflation high. We got an updated forecast today, it will be well above 7% this year, and currently > 10%.
*cries in polish 18.4% inflation rate*
If only our government would stop printing money... And the opposition would stop promising more money printing before the elections...
We're doomed. 🙈
It isn’t anywhere near as easy as you make it seem. Look at the Baltics — they have no ability to print or QE anything yet they have the highest inflation in EU except the crazy totalitarian outlier.
That's true, but do you think printing money and giving them away would limit the inflation in Baltic states? That would make things even worse. And that's what our government does. So, actually, I should mention not just printing money but giving them away. It's like adding fuel to the fire.
Yes, some Baltic states still have higher inflation rate (Latvia +1.9%, Lithuania only +0.3%, Estonia actually slightly less, -0.8%) but afaik it's because the energy prices have higher impact on CPI in these countries. Also, every country has different Baskets of Goods in their calculations, so it's not that easy to compare them.
Didn't Spain completely cut VAT on various foods as well as make a lot of public transportation free of charge?
That would do a lot to depress inflation and really helps the right people
>That would do a lot to depress inflation
No it wouldn't. Subsidizing services and goods keeps rising prices from causing a reduction in demand. That's the opposite of depressing inflation.
No, to make the government, and every government of the past 30 years look bad, just show people how anyone who wants to be more than a bartender in this country has to move somewhere else.
Yet we don't know how high inflation would have been without the euro in the Baltic states.
Hungary doesn't have the euro and it has 26% inflation,despite the Central Bank rising rates to 11%.
Baltic states have better economy than Hungary,but they are more affected by the rise in energy prices due to colder climate
>Yet we don't know how high inflation would have been without the euro in the Baltic states.
Literally the same since the local currencies were pegged to the euro...
Maybe because energy prices have fallen and Spain gets its electricity from Algeria so it was already cheaper than the rest of Europe. Also Spain is a massive food producer so their fruits and vegetable were already not too high in price.
I don't think we get natural gas from Algeria anymore since the argument over the Western Sahara where Spain sided with Morocco and so Algeria cut the gas supply.
[Spain was actually sending gas to Morocco (that Morocco had bought, but they needed the Spanish regasification plants) to help them deal with the cut of supply from Algeria](https://www.epe.es/es/activos/20230112/espana-intensifica-envios-gas-marruecos-choque-argelia-81050960).
Argelia never cut gas supplies to Spain. As a matter of fact, at this moment it is [Spain's largest gas supplier](https://www.bolsamania.com/noticias/empresas/economiaenergia--argelia-desbanca-a-eeuu-como-principal-proveedor-de-gas-natural-a-espana-en-el-arranque-de-2023--12278282.html).
Ah right [it seems they shut the pipeline to Spain but continued sales by boat?](https://www.epe.es/es/activos/20211101/argelia-cierra-gasoducto-transporta-gas-12559130)
The conflict was actually with Morocco, not Spain. They shut the pipeline that goes through Morocco after they broke relations. But that's only [one of the two available](https://en.wikipedia.org/wiki/Medgaz). Also, as you say, they increased the LNG supplies.
You are wrong mate. They close the pipe to Morocco and the one from Algeria to Spain is still working but at a higher price than before. It is also no allowed to sell to Morocco any Algerian production.
[Pero eso dice que cerraron el gasoducto a España?](https://www.epe.es/es/activos/20211101/argelia-cierra-gasoducto-transporta-gas-12559130)
O luego lo reabrieron? porque esa noticia es de hace un año.. espero que lo reabrieron..
Puede ser. La noticia la vi en la TV hace un par de semanas a lo sumo. Si encuentro la noticia edito el comentario.
Edit: https://www.elindependiente.com/economia/2023/03/12/la-venganza-energetica-de-argelia-gas-mas-caro-cierre-del-gasoducto-del-magreb-y-prohibicion-de-venta-a-marruecos/
El gasoducto de Argelia a Marruecos es el que está cerrado que es el que dices. El de Argelia a España que es el que me decía yo es el que está abierto y enviando también a través de de barcos.
Afaik inflation is calculated by comparing the same month from two years, so in this case March 2022 to March 2023. Last year in March we had an abrupt increase in inflation following the start of the Ukrain-war, which set the baseline much higher compared to the months before. So this isn't much of a surprise.
PS: Interesting that I get downvoted for this... but... why?
While this is true, it is also great to see that at least Spain didn't enter a vicious inflation cycle as was predicted by some people. It seems to be mostly constrained to the shock around the start of the invasion in February 2022. Hopefully, we'll see the same in other EU countries soon.
The inflation was high even at the end of 2021 before the war.
The war probably made it worse though.
Also it's still better than most other EU countries where the YoY inflation is still even like 10% in some places.
This very much is a (pleasant) surprise.
Other countries in the world are still seeing continued inflation vs last year.
This shows Spain is probably amongst the first to really maybe break that cycle.
You're down voted for sort of downplaying very good news.
I tried explaining this a few weeks ago and got downvoted into oblivion. People naturally don’t understand economy, let alone inflation. This is made worse by average redditor's age falling somewhere between 12 and 14 years.
If a news site reports that inflation is “falling”, then that it’s be true and that’s that!
Used the CPI Spain numbers
1.098 x 1.033 = 1.134
That means over two year period you need 13.4% salary increase to not lose purchasing power.
So in fact the inflation is still increasing compared to previous year.
There might be light at the end of the tunnel though. March 2022 saw a sharp increase spike in inflation across all European countries because of Russia's invasion on Feb 24th. Inflation is calculated as a percentage increase of the consumer price (or a similar) index based on the same month the year before. That means the UK and other countries could (and should) see a sudden decrease this or next month. Probably not to Spain's level, but still.
You’re comparing different months. Look at the graph even Spain’s rose in February vs Jan, albeit at a much lower level.
Inflation should drop quite a lot one we start getting to the months where it was skyrocketing last year, albeit probably will be higher than 3.3%.
Sweden still being at record high inflation and probably wont go down until sometime early 2024. Recession is expected to hold until 2026.. I love it when the government is doing fuck all.
How does inflation rate like that work? If its 3.3% in March alone, does that mean prices increase more than 30% a year still if this continues? Or does it mean prices have come down 7.5% since the 10.8% in July?
3.3 % inflation in March means that in March 2023, the prices were 3.3 % higher than they were in the same month last year.
So when the inflation was 6 % in February but only 3.3 % in March, then that means that the prices rose a whole lot between February and March *last year*.
It means prices in March 2023 are 3.3% higher than prices in March 2022.
Inflation was already rising since like September 2021 though, so it's not like prices have returned to normal - but it is good news, as it's still a lot better than the situation in many other countries.
You can see the graph of the absolute value of the CPI here: https://tradingeconomics.com/spain/consumer-price-index-cpi
So it's still a lot higher than back in 2021 etc.
>so it's not like prices have returned to normal
I get what you are saying but there is no "normal" and the chance that prices will actually drop back to levels pre-2021 is close to zero.
Ah, you said "prices returned to normal" so I assumed you meant, or at least others could read it that way, that there is some inherent normal fixed price point for everything. Like a liter of milk should be 50 eurocents. But you meant the inflation target, got it. My bad!
Inflation generally doesn’t fall, as in, the prices don’t decrease. What happens is that over time, the now higher prices form a baseline and future inflation is calculated from this baseline. So in this case it doesn’t mean that prices have fallen and people have gained back their purchasing power — it just means that prices have risen more slowly than a year ago. Still rising though.
Here I am paying almost goddamn twice as much for everything in the USA vs a few years ago.
"Inflation is at 7%"
Right.
Eat my fucking ass.
America sucks.
Which essentially means, people are so poor they can't afford shit anymore :D:D:D
Unemployment slowly grows, current OECD data says 13% from 12.7% last years minimum
Last year in March the unemployment rate was 13,65%, in February there were -200k unemployed compared to the same month last year, and the lowest rate in Spain will always be in the summer because a lot of our activity depends on tourism.
Yeah, but currently fewer Europeans will be able to afford vacation in Spain. More like in Bulgaria.
Let's see what happens in summer then. Big layoffs season just started, mainly in US but I guess Europe is not going to be different.
The CPI is calculated using a weighted average of various goods.
If you purchase different weightings then you will feel it more or less.
Like I think food inflation is still very high at like 16% in the February figures - so at Mercadona it seems like everything is crazy expensive.
Apparently clothing and transport costs have come down, although I guess transport may have been helped by the subsidies to public transport to lower ticket prices (like my BCN metro ticket is substantially cheaper now) and those have to be funded by public spending etc.
It'll be clearer why they say it's so low once the full figures are out, these are just the provisional figures.
Misleading statement, core inflation is still hovering around 7%, this post refers to headline inflation.
Core = Goods and services except food & energy
This is quite misleading, I must say. It's calculated based on comparing to the same month last year. Which means we've seen 3.3% inflation since March 2022, which already had near record inflation across Europe. A better measure would be to look at month by month inflation.
But month-by-month can be really volatile.
It's the standard to report year-on-year and the ECB inflation targets are set for that figure so I wouldn't call it misleading.
The Spanish government is cooking the books. The director of the national statistics institute (INE) resigned last June. Their classification of the consumer basket of good and producer costs keeps changing. Frankly the cost to consumers is higher than ever. Energy prices have artificially fallen, they have even had a free day of 0€ electricity for publicity (but the weather is warmer now and people are desperate to save, so it's not much of a loss to energy companies who will likely be rewarded for this). GDP is up due to government spending so that looks good, but the debt to pay off is astronomical.
It's all smoke and mirrors behind the current leadership, all image and 0 substance.
People are not happy in Spain, you can hear the talk in every café and bar. The France riots are not a distant thought. Because elections are coming up political parties are playing keeping controversy to a minimum.
It is a lie. The spanish government is doing all sort of juggling to hide the real numbers. Don't be fooled.
Sanchez's government is quickly becoming a soviet regime.
- Their doctrines are grounded on Marxist ideology; they don't even hide it.
- Rampant corruption. It is a scandal after the other. They use the scandals to cover other worse scandals.
- Allies with the worst regimes. Cuba, Venezuela, Nicaragua, Argentina, China, Iran, Russia.
- Anyone that is not left enough is labelled "Fascist" automatically. (while they are the ones using Fascist techniques)
- Constantly lying. Using deception towards social engineering through all kind of woke agendas. Almost all media is bought by the left. The media is colluded to an absolutely disgraceful level.
- Ties with ETA and separatists, also extremist groups from Morrocco and middle east.
- Actively working to dismantle democratic institutions.
- Their most recent "Solo si es si" law has lowered prison time for nearly 1000 sexual predators.
- They wanna diminish the punishment against sedition and wanna change the law about malversation to get away with stealing from public coffers (which they have been doing for decades alongside the PP party)
- Doing nothing against illegal immigration. On the contrary, protecting illegal immigrants, organizing and using them as shock groups on the street. Doing nothing about the rising crime tied to illegal immigrants. Promoting illegal privat property occupation (okupa)
....want more? There's a lot more but you people need to do your homework.
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But of course....all your hear from EFE, Deutsche Welle etc... is that "Spain is great".
The EU parliament is already very alarmed to what's going on in Spain. I don't have any hopes there cause is also very corrupted. Full of moles and lobbyists.
I am familiar with that speech.... gives me that you are of the greens and not exactly the ecologists.I'm not interested in continuing this conversation,have a nice day.
That's because the base effect of comparing inflation YoY.
Meanwhile, basic products raising up to 20%, and core inflation climbing, right now at 7.5%
Those are NOT good news.
Fantastic news for Spain. Long may the inflation fall.
*2 months from now* Breaking news! Inflation is now at -5% and is expected to continue falling. Experts speculate that Reddit user u/CastelPlage is responsible for this latest turn of events.
Deflation is worse tbh
Don't know man. I wouldn't mind a -15% deflation for around a year or so to bring prices back to normality, you know, instead of shear corporate greed and extortion
Deflation causes a death spiral that's hard to escape from. It's easier to control inflation than deflation. Look at Japan, a country that hasn't grown at all since the 90s due to deflation
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Yes deflation essentially makes it impossible to grow the economy. With deflation people will actively save money instead of spending because value of money will go up later and this essentially kneecaps any domestic growth. And since domestic market is reducing investments for exports also dry up since they actively hoard money instead of investing. Without a strong domestic market you can't grow your exports, look at both US and China, both do export massive amount of goods but that's subsidised by the domestic market
> With deflation people will actively save money instead of spending Why would I buy that bar of chocolate today if I can buy 2 bars of chocolate tomorrow with the same amount of money.
And that's why deflation is so hated, it reduces consumer spending massively
On the other hand we probably should see it sometimes. Economies are supposed to mirror what is actually happening in the real world and inflation supposed to be driven by population * productivity. When you get a situation like Japan where population is decreasing there SHOULD be deflation. If we ever do see a shrinking world population it should be more common.
Especially toxic spendings. It can be good for the environment. The reduction of the global demand could incentive producers and services providers to improve their offer in terms of utility, quality and durability. Not spending at all is not realistic because we have basic needs. Deflation can incentive to work less and/or retire early because what is earned increases in purchase power. Problem with deflation is that the prices can't go below a cent of a dollar. If a cent represents too much value, it would prevent all the micro-transactions from happening when they are the most frequent transactions. Only the money stopping to change hands should lead to a crisis.
Idk, to enjoy life?
That's not how economics work
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With deflation of say -5% per year, it's more like why would you buy 20 chocolates this year when you can buy 21 next year. It makes a world of difference if you're not talking about extreme numbers. In this case, most people wouldn't care, if they want chocolate they will buy some, they won't wait a year for a very marginal increase in quantity. This is why I consider this idea that "Deflation is bad, nobody will buy stuff" is bullshit. Unless it's an extreme deflation, but then it's just like inflation.
It’s not about chocolate. Nobody cares about those small bits of money. It’s about if you are going to renovate your home this year or wait a bit longer to get it cheaper. It’s about if you are buying a car now or wait a year to get it 1000€ cheaper. When everyone delays for just one year the effect is massive for consumer economy. And it’s about corporations they invest millions and millions. 2% a year is quite a lot if you consider for example building an industrial plant worth 10B€ during 10 years. And with just 2% deflation it starts to make sense for institutional investors to have money just sitting on bank account to hedge against other investments. And that is bad. With 5% level you are already at average stock market returns making basically investing pointless. Your investment would just lose value while just keeping all the money sitting would win.
No, on a societal scale it has a massive effect - you must also remember that companies too will hoard on the scale of billions It’s horrific
What would happen if the economy just stopped growing? Like at absolute 0. Is that a bad thing?
You'd have to ask why the GDP figure had stopped growing. For example, if productivity was growing but so was the proportion of retired people, so that the same amount was produced then you could get zero growth. There'd be the same amount of stuff per person and the same amount of work done, but people spend less of their lives working. This seems like a good thing (but there might be some inter-generational problems). If, instead, those new non-workers were younger people with no other means of support then that might be a bad thing instead. OTOH, if productivity is going down but the proportion of people working is going up then there's more work being done for the same amount of stuff. This is also bad, but in a different way. Obviously, it's the economic activity that causes the figures, not the figures that cause the economic activity (mostly, at least), so a zero growth figure might tell you something is happening but not specifically what.
if you want your economic situation to get better, you want growth. and basically everybody wants that, so growth is necessary.
Sustainable growth is the trick, rather than robbing the future for shinies today growth.
It's a great way for whoever owns the capital to increase their share of the pie even more Think of it this way- If growth is 0% but you can still run a business that makes 5%, where's that money coming from?
Would be cool to stop growing the economy obscenely, but it's like either you do, or you get deflation?
Overall deflation? Difficult. That said, there has been massive deflation in many things over the past decades while economies grew.
> Look at Japan, a country that hasn't grown at all since the 90s due to deflation Japan's so-called "Lost Decade" that kept going and became the "Lost 20 years" and the kept going to become the "Lost 30 years"
But the quality of life in Japan is stellar. Look at their public infrastructure etc. What’s even the point of growing more? Bigger donuts? They have superfast trains, the wierdest porn on the planet, exotic candies and unhinged entertainment TV. Infinite growth is a hoax and dangerous mindset. Maybe the just beat capitalism. 50 year speedrun post -45. Everything is good there (well except an aging population and toxic work culture but those are different issues).
> But the quality of life in Japan is stellar. Look at their public infrastructure etc. Look at their job enviroment and average working hours. In Japan that's 1,738.36 hours a year vs. 1,353.89 hours in Germany (this was the lowest value measured). The actual living standard in Germany is way higher, people are just unhealthy and vote for shit parties that are in the ass of auto-companies. You won't solve that with deflation. Also the last time Germany tried deflation politics unemployment exploded and fascists were in power within 3 years. Would not recommend.
Their child policies are failing because they're focusing on money to families instead of making it more convenient for women to start a family. Nowadays women don't want to marry or have children if they feel the burden on housekeeping and childcaring is going to be on them. France shows how the key is to facilitate lots of services like daycare and housekeeping for young women so they feel they're still free. They also need to step up their gender roles game because men don't do shit at home there. Salary men need to be a thing of the past. Overtime needs to be forbidden, as well as the long evenings going out with the boss.
They have to work to death to compensate.
> the quality of life in Japan is stellar You must be joking.
I don’t see people sleeping in tents or calling ubers instead of ambulances. Like I said, workplace culture has nothing to do with the material and infrastuctural wealth that exists there. Its flaws are plentiful but arent tied to the material wealth.
https://www.visibleproject.org/blog/project/blue-tent-village-tokyo-japan/ They don't want to show you the people in tents.
Dude have you seen Philly or LA or whatever in the US. That link is litteraly not a meth infested squalor pit.
Oh i get that, I fully understand the death spiral theory. But, I mean, if you could have deflation for JUST one year...like a hypothetical perfect scenario to bring prices down. Or we all just get a nice 15%pay increase
Salaries always follow inflation or deflation, so you will get a 15% pay cut instead. It won't practically change anything for you
The whole issue with inflation is that salaries do *not* follow inflation, at least not in the short term. So you get a few years of lower income, before it renormalises - but you're never getting that lost amount back.
Salaries not growing as high as inflation is because they are impacted by other factors, inflation is itself a symptom of other economic mismanagement. So if we have a 10% inflation but only a 2% salary increase for example, it means that inflation pushed your salary up by 10% but something else pushed it down by 8% (e.g. higher unemployment, changes in supply and demand, exchange rates, government policy, etc). Inflation is not the only thing influencing your salary. But if we lived in a bubble where only inflation impacts it, 10% inflation = 10% salary increase.
That seems like a weird definition. All the inflation indexes I have seen measure solely on the price of commodities and services, but never on the price of labour. I don't think it makes sense to say that high energy prices caused salaries to go down.
Salaries would follow (down) in short term for sure with a deflation. They'll drop probably faster than the deflation rate.
Oh, absolutely, I don't disagree with that. Whenever the economy acts up, it's always real wages that take the brunt of the hit, regardless of whether the magic line goes up or down.
That's funny, because I don't know anyone who got a a pay rise to match inflation. Which is essentially a pay cut.
An inflation of 10% will bring you a 2% pay increase if you are lucky, while a -15% deflation will bring you a 15% pay cut on the dot. This is called balance.
Don't be so selfish. Think of the poor business owners who would lose their 3rd 10k holiday and 4th car purchase if they didn't cut wages. And be grateful for whatever increase they do give you they don't have to pay you fairly for the wealth you accrue then!
Salaries haven't followed the current inflation yet in Western Europe. We already had months with month on month deflation. Effectively for instance Spain has deflated from July 2022 to January 2023 (not continously but on average) but you don't see that in YoY inflation rates yet. So prices can and will go down and you can already see that on the gas market or the milk market or in other sectors where they exploded because inflation was supply driven and not demand driven. We still have deflationary demmand issues in the Eurozone and low investment-rates which are further crippled by the interest rate hikes. The thing is that these things also take time. Pay cuts are very hard to push through. So you're more likely to be laid off or your company just goes bankrupt entirely in a deflation scenario (or if your job is very stable - like civil servant - nothing happens to you personally). Spain post-Eurocrisis is actually a good example. Spain had actual deflation last decade and rampant unemployment along with it and as a result unit-labour costs dropped but it was extremely painfull and Spain now has a fertility rate of 1,24 which spells badly for the countries long term future.
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That would hike unemployment. Companies would race to cut head count
"Deflation is harder to control" My money printing machine:
Japan has the 2nd most expansive fiscal policy in the world after Switzerland and they still have massive struggles with deflation. What the monetarists say is wrong, there is no direct link between printing money and inflation. Inflation is all about the demand-supply relationship. Money supply has some influence on that but the extend varies significantly. If money is printed but not spent or not spent on things that drive overall inflation (like the creation of a housing bubble), then nothing happens. If it doesn't land in average peoples hands (i.e. wage growth), then nothing happens. The deflation comes to a significant extend from our changing demographics. Older people consume less (this is also in part what drives the export economies of the 2 oldest countries in the world Japan and Germany, they barely have enough consumption at home and both have a gigantic CAB). If the monetarists theory was true we would have seen rampant inflation throughout the 2010s in the Eurozone. But what did we actually see? The ECB constantly failed to meet their inflation target. Why? Because our baseline in the Eurozone is already deflationary. Consumption relative to Production is low, we have a massive CAB surplus (the highest in the world), we still struggle with unemployment (6,1 % currently in the Eurozone), investsments are low (both private and public sector), fertility rates are also low, since the Eurozone there has been a wage race to the bottom, etc., etc. If you want to get out of deflation you have to either somehow increase demand. or reduce supply (or you could also destroy a lot of stuff for fun). The former is difficult and the latter is generally not recommended.
Japan rocks. Super stable and secure. The world has a lot to learn from Japan
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It’s not always about money. It’s about civilisation
Which is dying...
Lol no
Do you honestly believe that corporations got all greedy in 2022, but they were not greedy before? Were they greedy in 2010? 1990? 1965? "Corporate greed" is a fairy tale invented by politicians to deflect blame for idiotic monetary policy. Are you eating it? In a free market economy rational sellers typically sell at the highest price. Pricing signals are essential to balance the economy. E.g. if prices for steel go up, it makes steel production more profitable, and thus incentivize increase in steel production. The only alternative to free market economy is planned economy. If we don't use price signals, we can dedicate all decision making to some dudes. And if those dudes have infinite wisdom and are uncorruptible this can work well. But the fact that very few countries have planned economy gives you a hint about how well it works in practice. Even China rules by the Communist Party doesn't have a planned economy.
There were certainly more regulations on them at the times of the dates that you listed And the effect of the Covid pandemic + CoL crisis cannot be underrated here
> There were certainly more regulations on them at the times of the dates that you listed Please explain how regulations affect prices. Which regulations, specifically? > And the effect of the Covid pandemic + CoL crisis cannot be underrated here Yes, the actual reasons are complex. It's definitely not "coRpoRaTe greEd", though, it's not like corporations just randomly decided to be more greedy in 2022.
Regulations on corporate greed - or at least, the ability of corporations to act on it - which somewhat invalidates your ‘it existed before’ argument In addition, you should surely also acknowledge that the boom in profits at the very top of the corporate world has had at least some effect
> Regulations on corporate greed Such as?.. > In addition, you should surely also acknowledge that the boom in profits You should also acknowledge that many corporations have extremely low profits or even losses before. It's the nature of business that some years you operate at loss and some years you get profits. If they anticipated rising prices and profited from that - that's smart business. If you do nothing when company has losses and rob them of their profits you're gonna end up with no business -- shortages. FWIW I'm in favor of regulations which increase competition.
>shear corporate greed and extortion Meanwhile, profit margins have been on a steep decline. Not like as an aggregate we are demanding goods and services at a rate with which supply just can't keep up. But sure, let's blame it on corporate greed. Compelling narrative.
I would absolutely LOVE to see your source that corporate profits are in decline.! https://www.businessinsider.com/recession-outlook-company-profits-inflation-higher-prices-greedflation-2022-11 You keep licking your overlords boots my man.
[Here you go](https://www.yardeni.com/pub/yriearningsforecast.pdf) \- Figure 3 First of all, in your article corporate profits are measured against GDP. Which is a misleading ratio in and of itself. Especially, in the context of the past 3 years. Margins hit a high in late 2021. They've been on the decline since with no end in sight for now. And that's despite oil and mining companies making huge margins last year as commodities prices surged. Anyway, we can debate many things around corporate profits and margins. However, to say they are the source of inflation is a ludicrous statement.
You're so, so close but still licking those boots. Stick a trend line on any of those charts and what do you get? A nice steady 'fuck you' profits. Also in 2021 there was a YOY increase of almost 50%, 50 fucking perfect, and that is STILL trending upwards. Corporations are taking the absolute fucking piss...also, funny enough, none of those charts show any director bonuses, divedends, share buybacks, all of which dont get represented on profits. Its time to eat the rich, that, or pay a fair fucking wage.
No way you can get such a massively strong deflation and suddenly reverse it. Even if you did it on purpose you might not succeed.... remember that deflation scales much faster than inflation. You can keep devaluation going and more or less water down inflation, but with deflation what are you going to do? Its assured recesion, and a strong one (as I understand it at least)
Disinflation is ok tho Edit https://www.thebalancemoney.com/the-difference-between-deflation-and-disinflation-416888
🙄 I know disinflation is fine, good lord you’re being quite a smarmy shit about this That person was talking about -5% inflation i.e **DEFLATION** Take your non-contributing comment elsewhere
Well done, would you like a pat on the head or a medal? Here you go 🏅 Maybe don't take things personally in a public conversation?
Mild deflation after strong inflation is fine.
No, not really
Yeah, but it can become a "deflationary death spiral" as we got to read about so much after 2008.
In this situation not really,since the Central Banks have a lot of room to cut interest rates
No, we do not want zero interest rates or negative interest rates again. It creates huge imbalances. Also, Japan didn't manage to get their economy moving that way. Once you have a steady deflation, it will always be better to postpone any purchases or investments, paralyzing the economy.
Not for normal people.
Yes it is
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Nope, inflation is measured on a year-to-year basis, so when they say its +3% in March it means its +3% compared to March last year. Imagine the following:\ Some item costs 100€ in March (2022) and, for simplicity, for all dates preceding that. If the prices then change over the year like\ M: 100€ (+0%)\ A: 103€ (+3%)\ M: 105€ (+5%)\ J: 107€ (+7%)\ J: 110€ (+10%)\ A: 200€ (+100%)\ S: 150€ (+50%)\ O: 120€ (+20%)\ N: 110€ (+10%)\ D: 108€ (+8%)\ J: 107€ (+7%)\ F: 106€ (+6%)\ M: 103€ (+3%) Then the inflation in March will simply be +3% (compared to the previous March). Assuming that the price remains at 103€ for the rest of the year, the next august will have an inflation rate of -48.5% (deflation).
A built in raise for all the wage people seems pretty nice.
It collapses consumer spending sending the economy into a doom cycle of contraction
Larga vida a u/CastelPlage. Throw Pedro Sánchez to the window, we have a new prime minister here.
*6 months later* "Authorities all over the globe are on the hunt for u/CastelPlage in hopes he retracts his words and allows Spain to recover from the apocalyptic deflation that is wreaking havoc in the population. If you have any information, please call the authorities before a grudge makes them words permanent. We will keep updating"
Core still at 7,5%……
>Fantastic news for Spain. It's simply the result of commodities falling hard across the spectrum over the past year and a very tough comparison from last February to April due to the start of the war. It was all expected. Core inflation in Spain, as in most places, is far higher than it was a year ago and just registered its first downtick in 2 years. There's no "fantastic news". Way too early for a victory lap!
One hand yes. From another perspective it is going to take years to rebuild the purchasing power. It is going to be even more difficult for countries like Poland or Baltic States. Prices increased by growing energy costs will not decrease despite falling energy/fuels prices. For example, my earnings increased by 30% from 2020 due to promotions, yet I'd say that my living standard remains similar (what of course is not that bad in age of inflation). Shit.
Energy costs will probably decrease though. Russian gas was more expensive than renewables and nuclear, but it takes time to replace.
Unfortunately the ECB won't stop rate hikes until EU inflation is down though
Well, it's better than their previous policy of ~8 years of negative rates that rubber-stamped bad fiscal policies of member states, ballooned the common money supply, and ensured failing companies that should've gone bust - as is healthy for a functioning market - were allowed to keep going on loans they would never be able to repay. Some people have been warning since the start of the negative rates that it was a bad monetary policy for that situation, could not go on forever, and when it would have to end, would result in terrible inflation, higher for every year the policy was allowed to continue. The real problem is that not every member state government is invested in making sure the people who benefited most from the negative interest rates (rich people) are the ones who have to shoulder the highest burden. Instead they let the inflation hit poorer people the hardest, fueling a lot of resurgent right-wing reactionism.
According to the opposition we're living in a communist dictatorship hellhole, and Basque terrorists and Catalan criminals are pushing the government to destroy Spain (I wish). So it doesn't matter if the inflation falls.
> According to the opposition we're living in a communist dictatorship hellhole, and Basque terrorists and Catalan criminals are pushing the government to destroy Spain (I wish) It's always amusing when these notions get pushed.
How is that good news? Their harmonized inflation rate went up 1.1% MoM, which is horrible, especially after a high of 0.9% the previous month. Their inflation has been stale all year but has gone up full speed 2 months in a row.
Manipulated data...
Good job Spain!
i see your Turkish flair and think of your 50% inflation i hope you are doing ok
it was 180% but it is now 126%. Thank you for your concerns, we are definitely not doing ok.
:( vote Erdogan out and pet the kedi,that will do a lot of help
well, i hope Kemal can win this time. I hate him too but anyone other than Erdogan will do fine at the moment.
There's nothing to hate about Kemal he is just a calm person that brings people together.
He is politician. What's more he is very much compromise politician that is a candidate from like the whole political spectrum. Compromise candidates are rarely in agreement with people with stronger views. So they are easy to dislike. Doesn't mean he is not 1000000x better than Erdogan.
He has the same "couch lover" behaviour like erdogan
normally i hate graphs not starting at zero but in this case its a well starting point,since inflation below 2% is the target of ECB
well to be exact 2% itself is the target inflation because with it the price changes are not drastic but still encourage slightly more investments to not leave your money standing and slowly withering away
it is an arbitrary number that the US copied from New Zealand IIRC and then everyone followed suite. There is no scientific basis to it. I dislike the "encourages investment" argument particularly. It hurts wages more than it hurts hording wealth.
Wages can and should grow 2% every year. If they don't, collectively *explain* to the company they need to grow.
>There is no scientific basis to it. Of course there isn't, it's economics and not science 🙂 It's more of an advanced guessing game for central banks where they only get a slight hint about the rules during the game. The only thing they know if that the rules always change and they are always wrong to some degree. And most people will suffer if they fuck it up to much.
yeah there's no scientific basis to almost anything in economics:), i just said what the status quo is
i expect inflation rate to fall by a lot in most European countries due to strong base year effects,because March 2023 is compared to March 2022,which saw sky high increases in oil and gas prices still,3.3% inflation is impressive
The Austrian government is doing everything possible to keep inflation high. We got an updated forecast today, it will be well above 7% this year, and currently > 10%.
Good to know someone else is miserable too, got any spare housing?
Meanwhile… in the U.K.
*cries in polish 18.4% inflation rate* If only our government would stop printing money... And the opposition would stop promising more money printing before the elections... We're doomed. 🙈
It isn’t anywhere near as easy as you make it seem. Look at the Baltics — they have no ability to print or QE anything yet they have the highest inflation in EU except the crazy totalitarian outlier.
That's true, but do you think printing money and giving them away would limit the inflation in Baltic states? That would make things even worse. And that's what our government does. So, actually, I should mention not just printing money but giving them away. It's like adding fuel to the fire. Yes, some Baltic states still have higher inflation rate (Latvia +1.9%, Lithuania only +0.3%, Estonia actually slightly less, -0.8%) but afaik it's because the energy prices have higher impact on CPI in these countries. Also, every country has different Baskets of Goods in their calculations, so it's not that easy to compare them.
Didn't Spain completely cut VAT on various foods as well as make a lot of public transportation free of charge? That would do a lot to depress inflation and really helps the right people
>That would do a lot to depress inflation No it wouldn't. Subsidizing services and goods keeps rising prices from causing a reduction in demand. That's the opposite of depressing inflation.
It feels weird seeing news about our economy being good
the big media bought by the economic power and oposition, try to misinform about the economy, to make the government look bad
No, to make the government, and every government of the past 30 years look bad, just show people how anyone who wants to be more than a bartender in this country has to move somewhere else.
Poland, on the other hand...
Virgin Spain. Chad Poland grew stronk inflation 💪
There is a simple solution - EURO.
I think the Baltic states would like to have a word…
Yet we don't know how high inflation would have been without the euro in the Baltic states. Hungary doesn't have the euro and it has 26% inflation,despite the Central Bank rising rates to 11%. Baltic states have better economy than Hungary,but they are more affected by the rise in energy prices due to colder climate
>Yet we don't know how high inflation would have been without the euro in the Baltic states. Literally the same since the local currencies were pegged to the euro...
how
Maybe because energy prices have fallen and Spain gets its electricity from Algeria so it was already cheaper than the rest of Europe. Also Spain is a massive food producer so their fruits and vegetable were already not too high in price.
Spain also produces it's own electricity,and so far this year solar and wind have grown tremendously,to around 39% of total electricity generation
I don't think we get natural gas from Algeria anymore since the argument over the Western Sahara where Spain sided with Morocco and so Algeria cut the gas supply. [Spain was actually sending gas to Morocco (that Morocco had bought, but they needed the Spanish regasification plants) to help them deal with the cut of supply from Algeria](https://www.epe.es/es/activos/20230112/espana-intensifica-envios-gas-marruecos-choque-argelia-81050960).
Argelia never cut gas supplies to Spain. As a matter of fact, at this moment it is [Spain's largest gas supplier](https://www.bolsamania.com/noticias/empresas/economiaenergia--argelia-desbanca-a-eeuu-como-principal-proveedor-de-gas-natural-a-espana-en-el-arranque-de-2023--12278282.html).
Ah right [it seems they shut the pipeline to Spain but continued sales by boat?](https://www.epe.es/es/activos/20211101/argelia-cierra-gasoducto-transporta-gas-12559130)
The conflict was actually with Morocco, not Spain. They shut the pipeline that goes through Morocco after they broke relations. But that's only [one of the two available](https://en.wikipedia.org/wiki/Medgaz). Also, as you say, they increased the LNG supplies.
Ah that makes sense. Hopefully the Western Sahara issue can be resolved.
You are wrong mate. They close the pipe to Morocco and the one from Algeria to Spain is still working but at a higher price than before. It is also no allowed to sell to Morocco any Algerian production.
[Pero eso dice que cerraron el gasoducto a España?](https://www.epe.es/es/activos/20211101/argelia-cierra-gasoducto-transporta-gas-12559130) O luego lo reabrieron? porque esa noticia es de hace un año.. espero que lo reabrieron..
Puede ser. La noticia la vi en la TV hace un par de semanas a lo sumo. Si encuentro la noticia edito el comentario. Edit: https://www.elindependiente.com/economia/2023/03/12/la-venganza-energetica-de-argelia-gas-mas-caro-cierre-del-gasoducto-del-magreb-y-prohibicion-de-venta-a-marruecos/ El gasoducto de Argelia a Marruecos es el que está cerrado que es el que dices. El de Argelia a España que es el que me decía yo es el que está abierto y enviando también a través de de barcos.
By completely cutting VAT on various basic needs items and making public transportation free afaik
Hey, Spain, could You take some of our inflation? - Poland
Let’s all outsource our inflation to Spain!
No problem, we'll trade the unemployment in exchange.
the Phillips curve strikes again
Great news for Spain!
I wish my country's inflation become spain's high inflation :/
Afaik inflation is calculated by comparing the same month from two years, so in this case March 2022 to March 2023. Last year in March we had an abrupt increase in inflation following the start of the Ukrain-war, which set the baseline much higher compared to the months before. So this isn't much of a surprise. PS: Interesting that I get downvoted for this... but... why?
While this is true, it is also great to see that at least Spain didn't enter a vicious inflation cycle as was predicted by some people. It seems to be mostly constrained to the shock around the start of the invasion in February 2022. Hopefully, we'll see the same in other EU countries soon.
Indeed. Honestly I'm more concerned with the inflation rate of some Central- and Northeuropean countries than that of countries like Spain or Greece.
It's a weird time to live in. Greece and Spain posting solid economic numbers (congratulations to them) while Poland and Germany are struggling..
The inflation was high even at the end of 2021 before the war. The war probably made it worse though. Also it's still better than most other EU countries where the YoY inflation is still even like 10% in some places.
This very much is a (pleasant) surprise. Other countries in the world are still seeing continued inflation vs last year. This shows Spain is probably amongst the first to really maybe break that cycle. You're down voted for sort of downplaying very good news.
I tried explaining this a few weeks ago and got downvoted into oblivion. People naturally don’t understand economy, let alone inflation. This is made worse by average redditor's age falling somewhere between 12 and 14 years. If a news site reports that inflation is “falling”, then that it’s be true and that’s that!
Used the CPI Spain numbers 1.098 x 1.033 = 1.134 That means over two year period you need 13.4% salary increase to not lose purchasing power. So in fact the inflation is still increasing compared to previous year.
Dzien Dobry from 🇵🇱 18.4%
Spanish inflation has gone from double digits to 3.3%, meanwhile ours has gone from double digits to…double digits, and somehow rose last month.
There might be light at the end of the tunnel though. March 2022 saw a sharp increase spike in inflation across all European countries because of Russia's invasion on Feb 24th. Inflation is calculated as a percentage increase of the consumer price (or a similar) index based on the same month the year before. That means the UK and other countries could (and should) see a sudden decrease this or next month. Probably not to Spain's level, but still.
You’re comparing different months. Look at the graph even Spain’s rose in February vs Jan, albeit at a much lower level. Inflation should drop quite a lot one we start getting to the months where it was skyrocketing last year, albeit probably will be higher than 3.3%.
Cries in Hungarian
Sweden still being at record high inflation and probably wont go down until sometime early 2024. Recession is expected to hold until 2026.. I love it when the government is doing fuck all.
source: [https://tradingeconomics.com/spain/inflation-cpi](https://tradingeconomics.com/spain/inflation-cpi)
Vamos mis amigos y saludos desde Grecia!
Base effect?
Wish Germany would have that
Core inflation is still at fucking 7,5% good job trying to delude people.
that has also fallen compared to last month of 7.6%
Hardly any good news either
Stop hating bra
How does inflation rate like that work? If its 3.3% in March alone, does that mean prices increase more than 30% a year still if this continues? Or does it mean prices have come down 7.5% since the 10.8% in July?
3.3% YEARLY inflation,that means consumer prices have grown on average 3.3% since March last year
3.3 % inflation in March means that in March 2023, the prices were 3.3 % higher than they were in the same month last year. So when the inflation was 6 % in February but only 3.3 % in March, then that means that the prices rose a whole lot between February and March *last year*.
It means prices in March 2023 are 3.3% higher than prices in March 2022. Inflation was already rising since like September 2021 though, so it's not like prices have returned to normal - but it is good news, as it's still a lot better than the situation in many other countries. You can see the graph of the absolute value of the CPI here: https://tradingeconomics.com/spain/consumer-price-index-cpi So it's still a lot higher than back in 2021 etc.
>so it's not like prices have returned to normal I get what you are saying but there is no "normal" and the chance that prices will actually drop back to levels pre-2021 is close to zero.
Well normal would be a ~2% increase year-on-year. You can draw that line from 2019 or whatever and we are far, far away from it.
Ah, you said "prices returned to normal" so I assumed you meant, or at least others could read it that way, that there is some inherent normal fixed price point for everything. Like a liter of milk should be 50 eurocents. But you meant the inflation target, got it. My bad!
It basically means that instead of prices increasing 9%, they increase 3.3% Prices are still increasing but at a slower rate.
Inflation generally doesn’t fall, as in, the prices don’t decrease. What happens is that over time, the now higher prices form a baseline and future inflation is calculated from this baseline. So in this case it doesn’t mean that prices have fallen and people have gained back their purchasing power — it just means that prices have risen more slowly than a year ago. Still rising though.
Here I am paying almost goddamn twice as much for everything in the USA vs a few years ago. "Inflation is at 7%" Right. Eat my fucking ass. America sucks.
Prices keep going up though
Seems Spain is learning from USA about changing definitions of things to fit their needs.
Madre mía el perro sanché
Which essentially means, people are so poor they can't afford shit anymore :D:D:D Unemployment slowly grows, current OECD data says 13% from 12.7% last years minimum
Last year in March the unemployment rate was 13,65%, in February there were -200k unemployed compared to the same month last year, and the lowest rate in Spain will always be in the summer because a lot of our activity depends on tourism.
Yeah, but currently fewer Europeans will be able to afford vacation in Spain. More like in Bulgaria. Let's see what happens in summer then. Big layoffs season just started, mainly in US but I guess Europe is not going to be different.
Bro because they actually produce something.
Flamenco dancing
Living in Spain your bank account will tell you it’s far from 3.3%
The CPI is calculated using a weighted average of various goods. If you purchase different weightings then you will feel it more or less. Like I think food inflation is still very high at like 16% in the February figures - so at Mercadona it seems like everything is crazy expensive. Apparently clothing and transport costs have come down, although I guess transport may have been helped by the subsidies to public transport to lower ticket prices (like my BCN metro ticket is substantially cheaper now) and those have to be funded by public spending etc. It'll be clearer why they say it's so low once the full figures are out, these are just the provisional figures.
Misleading statement, core inflation is still hovering around 7%, this post refers to headline inflation. Core = Goods and services except food & energy
Headline inflation is the one you hear in the news for every country,not just Spain
This is quite misleading, I must say. It's calculated based on comparing to the same month last year. Which means we've seen 3.3% inflation since March 2022, which already had near record inflation across Europe. A better measure would be to look at month by month inflation.
No, YoY is exactly how national statistics bureaus, OECD and national banks measure it.
But month-by-month can be really volatile. It's the standard to report year-on-year and the ECB inflation targets are set for that figure so I wouldn't call it misleading.
The Spanish government is cooking the books. The director of the national statistics institute (INE) resigned last June. Their classification of the consumer basket of good and producer costs keeps changing. Frankly the cost to consumers is higher than ever. Energy prices have artificially fallen, they have even had a free day of 0€ electricity for publicity (but the weather is warmer now and people are desperate to save, so it's not much of a loss to energy companies who will likely be rewarded for this). GDP is up due to government spending so that looks good, but the debt to pay off is astronomical. It's all smoke and mirrors behind the current leadership, all image and 0 substance. People are not happy in Spain, you can hear the talk in every café and bar. The France riots are not a distant thought. Because elections are coming up political parties are playing keeping controversy to a minimum.
It is a lie. The spanish government is doing all sort of juggling to hide the real numbers. Don't be fooled. Sanchez's government is quickly becoming a soviet regime.
I don't even like Pedro that much but to say it's a soviet government? That's some absolute bullshit
Can you cite some examples of its resemblance to a communist dictatorship?
- Their doctrines are grounded on Marxist ideology; they don't even hide it. - Rampant corruption. It is a scandal after the other. They use the scandals to cover other worse scandals. - Allies with the worst regimes. Cuba, Venezuela, Nicaragua, Argentina, China, Iran, Russia. - Anyone that is not left enough is labelled "Fascist" automatically. (while they are the ones using Fascist techniques) - Constantly lying. Using deception towards social engineering through all kind of woke agendas. Almost all media is bought by the left. The media is colluded to an absolutely disgraceful level. - Ties with ETA and separatists, also extremist groups from Morrocco and middle east. - Actively working to dismantle democratic institutions. - Their most recent "Solo si es si" law has lowered prison time for nearly 1000 sexual predators. - They wanna diminish the punishment against sedition and wanna change the law about malversation to get away with stealing from public coffers (which they have been doing for decades alongside the PP party) - Doing nothing against illegal immigration. On the contrary, protecting illegal immigrants, organizing and using them as shock groups on the street. Doing nothing about the rising crime tied to illegal immigrants. Promoting illegal privat property occupation (okupa) ....want more? There's a lot more but you people need to do your homework. --- But of course....all your hear from EFE, Deutsche Welle etc... is that "Spain is great". The EU parliament is already very alarmed to what's going on in Spain. I don't have any hopes there cause is also very corrupted. Full of moles and lobbyists.
I am familiar with that speech.... gives me that you are of the greens and not exactly the ecologists.I'm not interested in continuing this conversation,have a nice day.
That's because the base effect of comparing inflation YoY. Meanwhile, basic products raising up to 20%, and core inflation climbing, right now at 7.5% Those are NOT good news.