The CPI rose 10.2% in June, a level not seen since 1985 and it does so in a year in which another increase of close to 10% was already registered in March, when it grew 9.8%. All this is framed in a context of several crises that are stacked one on top of the other and that, in addition, were aggravated by the invasion of Ukraine by Russia. The Government’s measures to mitigate its effects -some of them, prior to the war- have been insufficient to curb inflation.

For two reasons. In the first place, because the price of energy products is one of the goods measured by the consumer price index. When taking these out – also the fresh foods; both, due to their volatility- the underlying inflation is obtained from the equation, which in this case would also be at record figures: 5.5%. This is the highest rate in almost 30 years.

On the other hand, an increase in the price of energy increases the price of life and makes the production and distribution of any other product more expensive. In this case, the energy crisis affects both electricity and fuel and gas. That is, there is no industry or job that is not affected by it, even tangentially. This ends up transferring to the final prices measured by the CPI.

Yes, several. To begin with, the health crisis that paralyzed the world and slowed down the economies of the entire planet. Later, the return to normality, albeit with restrictions, was very accelerated and the supply chain was not prepared to restart activity at that rate, which, together with the previous slowdown, caused a crisis in supplies and raw materials that is still kicking. , especially when it comes to semiconductors. However, the prices of many other goods and materials, such as wood, glass or metals, skyrocketed.

In fact, electricity was already stressed months before the war, largely due to the high price of gas. When the Government approved its first package of measures, in mid-September 2021, the last month had closed with the megawatt hour at 105.94 euros in the wholesale market, a figure never seen then. September would end at 156.14 euros and electricity continued to rise for several months. Now it has slowed down slightly (169.62 per MWh in June, not counting the bonus for combined cycle plants after the cap on gas), but it continues to shoot up.

Yes, and this prevents the indicator from being higher. The INE measures the price of fuel once the discount of 20 cents per liter has been applied, not the price that appears at the pump. The measure, which was approved in April and was to be in force for three months, will remain in place until December 31.

However, the price escalation has already ended up engulfing the discount. Since January, the price of gasoline has grown by 30% and that of diesel has risen even more, by 54%. The increases -of 66 and 73 cents, according to the European Union’s oil bulletin- triple the Government bonus, which came when a liter of fuel was around 1.8 euros and has now settled above two euros and the sector does not rule out that it continues to climb.

To this we must add that the measure is universal, something that is even criticized by voices within the Government itself, in addition to the European Commission or the IMF. There are several studies that link the level of income with fuel consumption, so that the groups most affected by the crisis would be benefiting less from the discount than the high incomes.

Mainly due to the refining process. Currently there is a huge bottleneck in refineries, because oils of different quality and origin require different processes and not all of them can be adapted from one to another. With the sanctions against Russia and the closure of that tap, it has been necessary to resort to other oil-producing countries – which, in any case, set the prices of this market – and the plants prepared for Russian crude have not been able to assume that burden. Thus, there is greater demand and less supply, so the price of fuel, which is listed on different markets, has risen. Spain, at least, has versatile refineries, so from the sector they guarantee supply, although gasoline and diesel will continue to be expensive while this situation lasts.

Something, but less than expected by the Government. The difference was especially significant in the first days of application of the Iberian exception, when a heat wave and low wind energy production came together that made it necessary to resort more than normal to gas plants to generate electricity. Thus, once the bonus to these plants was discounted, the reduction was around 9%, not the 15% or 20% that the Executive expected.

It is still early to assess it, but it is a measure that also has several asterisks and is seen as exceptional. Paolo Gentiloni, head of economic affairs at the European Commission, warned a few weeks ago that the benefits of this reduction are “uncertain” and that these reductions traditionally have “a bad record when it comes to translating into lower prices for consumers” . As Gentiloni explained in a letter to the economy ministers, the discount can be offset “by rate increases by energy suppliers.”

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