The IEE warns that the radical abolition of measures such as the fuel bonus could lead to a new price increase
Inflation will remain one of the main concerns for the Spanish economy in 2023. And it is that, although a moderation of the price increase is expected, the ratio will remain at a high level in the coming months, far from the target of 2% set by the European Central Bank (ECB).
The monetary body again warned this Monday about the risk of a technical recession in the eurozone, with activity falling in this last quarter of the year and the first of 2023. A contraction that would still be accompanied by inflation that would remain at an average of 6.3% next year.
The ECB’s general director of economics, Óscar Arce, explains that it’s not just about energy prices. Another risk that could slow inflation is “more robust growth in wage bills”. With a view to 2023, the institution predicts a wage increase of more than 5% in the eurozone.
Arce also recalls that virtually all governments in the region are implementing major budgetary measures to alleviate the costs of the energy crisis. “This explains why inflation in 2022 and 2023 may be lower than it would have been if it weren’t for them, but from 2024, when it starts to ease, there will be a temporary uptick,” warns Arce.
Along the same lines, Íñigo Fernández de Mesa, president of the IEE, stated this Monday, just a few days after the executive announced its third anti-crisis plan, which is expected to include changes to the 20 cents-per-liter fuel bonus, in addition to a check for vulnerable families, maintenance of the VAT reduction on the electricity bill.
From the think tank associated with the CEOE, they warn that the government will have to be very careful in the long run when it starts withdrawing these specific support measures. They believe, like the ECB, that if it is not done gradually, it will cause an increase in inflation.
The institute’s projections suggest that inflation will end this year at 8.5%, a figure that would fall to 3.5% in 2023. At this point, they call for caution, and agree with the ECB that an additional salary increase higher than estimated may lead to undesirable second-round effects.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
