The Government admits that "it cannot stop" the escalation of inflation after the record in June
Prices
rose
by
10.2% year-on-year in June
in Spain, according to the INE this week, and so far this year they have accumulated an
average increase of 8.45%
, but their impact is not the same for all Spanish families , but those households with
lower incomes,
pensioners
or
those with a
lower educational level
are the main victims.
This is confirmed by
Ángel Gavilán
, Director General of Economy and Statistics of the
Bank of Spain
, who this week explained that "in recent months, households with lower incomes, households in which the person of reference was over 65 years of age and households with secondary education or less education
experienced higher inflation than
that endured by households with higher incomes, those in which the reference person was younger and those with a higher educational level".
These three groups -low incomes, less education and over 65s- are the ones that suffer the
most pronounced rise in prices
and the main reason lies in the
composition of their spending,
since they allocate a greater proportion of their total consumption to goods and services that lead the rise in prices: such as
food
and
electricity
.
According to the
Family Budget Survey
published on Tuesday by the
INE
, at the end of 2021, households in which the main breadwinner is a person
over 65 years of age
spend
17.1%
of their total spending on shopping at the
supermarket . -compared to the 15.3% average in Spain-, while the weight of the
electricity
, gas and other fuel
bill amounts to
4.75%
, compared to the 4% national average.
If we look at a household in which the main breadwinner is a
young person between the ages of 16 and 29
, spending on
food
only accounts
for 11.2% of the total
(5.9 points less than the pensioner), while what is allocated
electricity
, gas and fuels accounted
for
3.7%
(one point less).
Since these two components are the ones that are rising the most, the impact is greater for the household of people over 65 years of age.
This is added to the fact that in Spain
4.74 million people
-2.74 million women and 1.9 million men- receive a
pension lower than the Minimum Interprofessional Salary
(SMI), that is, less than 14,000 euros a year or 1,000 euros per month -plus two extra payments-.
Hence, this segment is more vulnerable.
For this reason, the Bank of Spain calculates that in recent months pensioner households have suffered
inflation 1 point higher than the rest.
2 more points of the IPC for low incomes
The
educational level
also implies differences, being the households in which they have
less education
the ones that suffer a
higher inflation
again due to the composition of their spending.
The Bank of Spain explains that "in the 2006-2020 period, the proportion of spending on essential goods (especially food, electricity, gas and other fuels) represented 24% of consumption in the bottom quartile of income distribution ; a percentage that drops to 17% in the top quartile."
In
2021
this gap is repeated.
While households with studies below the first stage of Secondary Education spend
19.5% of their spending on food and 5.2% on electricity
, gas and other fuels;
those with training equivalent to a master's degree and a doctorate spent
12.3% of the total on food and
3.3%
on electricity, gas and fuel
.
The difference exceeds 9 points.
Beyond age and education,
income level
is perhaps the most relevant parameter.
The Bank of Spain points out that between 2006 and 2020, households that are in the bottom quartile of income distribution - those with the lowest incomes - suffered
average inflation "almost 2 percentage points higher
than that experienced by of the top quartile.
"The share of
spending on essential goods
is behind many of the differences in inflation rates faced by households with different income levels. Specifically, during this period food, electricity, gas and other fuels together accounted for
58%
of the inflation experienced by households with lower incomes. This percentage drops to
34%
in the case of households with higher incomes," they point out.
In 2021, households with
a monthly income of between 500 and 1,000 euros
spent
18% of spending on food
and 5.3% on electricity;
percentages that decrease as income increases.
For households with
incomes between 2,500 and 3,000 euros,
food accounts for
15%
and electricity, 3.9%;
while for those with incomes above 5,000 euros, spending on food accounts for 11.4% and electricity, 3%.
The institution chaired by Pablo Hernández de Cos calculates that in recent months families with lower incomes have faced inflation 1.2 points higher than those with high incomes.
This means that low-income families have had to spend an average of
51 euros more on food and 23 euros more on electricity
;
while high-income families have increased their spending on food by
110.7 euros
per month and have allocated an additional
37 euros
per month to electricity and fuel.
According to the supervisor, some of the measures approved in recent months will have an impact on the distributional effects of inflation.
In particular, the
reductions in indirect taxes
(such as the Special Tax on Electricity, which is 0.5%, or the drop in VAT to 10%, which will now drop to 5%)
reduce the average inflation of lower income households
.
Between April 2021 and March 2022, this decrease was 1 point, compared to the 0.5 point decrease in household inflation in the upper income quartile.
However, other measures such as the
discount of 20 cents per liter
on fuel have reduced inflation more for
households with higher incomes
(0.6 points) than for those with lower incomes (0.35).
Conforms to The Trust Project criteria
Know more
INE
Taxes
Inflation