BBVA Research warns of “worrying” underlying inflation still at 4% in 2023

Daniel Knight


Updated at 8:56 p.m.

All the lights are now on inflation. BBVA Research warned yesterday against Price increase suffered by Spain and underlined that this problem will continue to be rooted next year as well. The institution expects that the change in the IPC remain elevated, averaging nearly 8% in 2022 and 3% in 2023. And he adds: “Even more worrying may be the trend in the underlying, which could average 5% this year and 4% next year. next. Next” .

For the bank’s research service, “future developments will depend on several factors in international markets, such as the impact of the invasion of Ukraine on the price of raw materials or the persistence of problems in the chains However, the effect that the behavior of corporate margins, the outcome of collective bargaining and the impact of public policies will be decisive, which is why he urges the government, workers and businessmen to make decisions that help spread the blow of inflation and prevent it from perpetuating itself, “which would increase the risk of recession”. In other words, that the executive and the social agents arrive at the long-awaited income pact to avoid fueling an inflationary spiral.

Thus, BBVA Research recognizes that the rise in prices “continues to surprise on the upside, and is no longer limited to a few components of the CPI”. The underlying, which comprises 82% of the basket of household goods and services, “could rise further and reach an average of nearly 6% during the second half,” he warns in his latest report.

In terms of economic growth, the news is also not good, compared to the subdued optimism that existed at the start of the year. The war in Ukraine and the plague of inflation are derailing a full recovery in the short term. “The research service BBVA has revised its forecast for Spanish GDP growth for 2023 downwards, from 3.3% to 1.8%, although it maintains the growth forecast for 2022 at 4.1%. The reasons include the scarcity of certain raw materials, the increase in their price and the recent translation that has been observed of this increase in production costs towards inflation, as well as the expected rebound in the financial burden of companies and families. that the ECB is making progress in withdrawing monetary stimuli,” the firm said.

Likewise, the institution maintains that family spending has been negatively affected by the rise in the prices of raw materials and intermediate goods, and in particular fuel and electricity, which have not fallen as expected by the Government. and despite the public measures adopted.

Beyond macroeconomic forecasts, BBVA research he took the opportunity to shoot an arrow at the government for the measures adopted; in particular, due to higher taxes on energy and banks. The organization considers that “it makes no sense to penalize specific sectors, such as the banking system, which does not generate negative externalities in the rest of the economy, but on the contrary: it facilitates the allocation of productive resources to the most dynamic and the most dynamic sectors”.

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