The Government is now trying to avoid stagflation after assuming that inflation will continue to skyrocket throughout the year

• Opinion Spain enters the tornado of 'stagflation'

• Inflation The war in Ukraine puts pressure on food prices: they are already 21% more expensive than a year ago

Inflation will continue to run wild this year.

The Government has already assumed and recognized it, and what it is now trying to avoid is that the country falls into the

: a high level of prices with very little, null or even negative growth.

In the Executive

, and they consider that Spain is in an earlier phase.

Growth, they point out, remains vigorous and they cling to European funds to keep it that way.

Both in Moncloa and in the Ministry of Economy they maintain that this year will be the year of "

", that the deployment of European funds is going to "

" and that the important thing is to prevent the undoubted slowdown that the economy will suffer from becoming in a brake

Because if that happened, then Spain would indeed be doomed to stagflation.

In addition, they insist that the National Plan that the President of the Government, Pedro Sánchez, presented at the beginning of the month in Congress seeks to “

” immediately.

That the income pact seeks to avoid fueling the inflationary spiral and turning it into a structural phenomenon.

But all this is far from clear.

First, because when the price increase picks up speed it is very difficult to contain.

«

», which Paul Volcker said.

In addition, the Government expected concrete measures from Europe such as decoupling the price of gas from the electricity bill, something that has not yet occurred.

And it doesn't seem so simple either that the Spanish economy is going to be able to maintain high growth rates.

Although Economy maintains that they have been cautious in their forecasts and that there will be no revision until April, the truth is that the invasion of Ukraine by Russia is going to have a notable impact on the Gross Domestic Product (GDP), and the longer it lasts the conflict worse.

Double-digit inflation?

This complex context is reached after inflation closed 2021 with an average increase of 3.1%.

Institutions such as the OECD or the Bank of Spain expected a few months ago that this year it would remain at similar figures or somewhat higher, but Vladimir Putin's inflation has caused an upward revision of expectations.

Funcas' panel of economists believes that inflation could reach 6.5% on average this year.

Raymond Torres, its director of International Situation and Analysis, warned yesterday in an interview on Telemadrid that, after shooting up to 7.4% in February, the IPC could reach 8% in March and stabilize at 9% in the coming months .

In the worst case scenario, if Russia turns off the gas tap or all the countries decide to stop buying it -something that the US and the UK have already announced-,

.

“

.

According to some estimates, the price of electricity could reach 800 euros per megawatt hour on average if the Russian supply is totally cut off.

In the short term, we are facing more inflation, which could reach 10% in a scenario of a total cut in imports of Russian gas.

That would be the worst case scenario, it is more likely that we will reach 8% in March and touch 9% in the coming months », he pointed out.

If the CPI reaches double digits, “

and a spiral between wages and prices.

If we all try to compensate for the loss of purchasing power, a conflict would be created between employers and workers in which we would all lose, "warns the director of Funcas.

The rise in inflation will parallel the fall in growth, something the IMF has already warned about.

“In many countries, the crisis is generating

, in a context of already high price pressures.

Fiscal policy should support the most vulnerable households to help them offset the rising cost of living," the institution led by Kristalina Georgieva has requested.

“

.

Of the large EU countries, Spain is the one that has emerged the weakest from the pandemic.

It is the one that saw its GDP fall the most, and we are not even close to recovering pre-pandemic levels.

Due to our business profile, runaway inflation caused by energy and food, affecting an economy like ours, can, without a doubt, generate a major recession, ”Antonio Castelo, an analyst at iBroker.es, ends for EL MUNDO.

Conforms to The Trust Project criteria

Know more

• Inflation

Prices The increase in the Minimum Wage will force some companies to raise prices and fuel inflation

PricesInflation exceeds forecasts and unleashes a battle for wages: "You have to tighten your belt"

Final data from INE Inflation shot up 6.1% in January driven by the rise in gasoline prices

See links of interest

• Last News

• When does the 2021 Income start?

• Income 2021

• Work calendar 2022

• Economy Podcast

• Red Star - Real Madrid

• Urbas Fuenlabrada - Barca

• Bitci Baskonia - Anadolu Efes Istanbul

• Liverpool - International

• Bayern Munich - Salzburg, live