Thursday, May 26

Retirees will receive a ‘pay’ in January to compensate for the 1.6% deviation in prices

Prices rose 5.6% in November compared to the same month last year, driven by food and gasoline, their highest level since September since 1992. In line with the estimates of many economists, the growth of the Inflation accelerates in the final stretch of the year, on Christmas Eve, according to the advanced CPI published yesterday by the National Institute of Statistics (INE).

If this figure is confirmed within fifteen days, when the INE publishes the final numbers of the shopping basket in the eleventh month of the year, pensions will rise by 2.5% in 2022, with which spending on this item will grow by 3,500 million euros for the

effect of inflation. The reason is that, since the new revaluation system was approved, these benefits are updated according to the average of the IPC anual from December 2020 to November 2021.

This increase in pensions will affect 9.89 million contributory pensions, while the minimum and non-contributory pensions will increase by 3%. Consequently, with the data of the inflation ahead of November on the table, the average for the last twelve months stands at 2.5%, a rate that is 1.6 points higher than the rise in pensions applied throughout 2021.

For this reason, this revaluation will have to be added the ‘pay’ for January to compensate for the deviation in inflation, which the Executive estimated at 0.9%, with which the difference would finally remain at 1.6 points. The Minister of Inclusion, Social Security and Migration, José Luis Escrivá, quantified the cost of this compensatory payment at around 1,900 million euros, which will be paid next January to pensioners.

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To the compensation part for the deviation in prices, we must add the amount to consolidate the pension payroll for 2022. Therefore, the total amount to be disbursed to compensate for the update and the revaluation will rise by more than 3,500 million euros due to the effect of inflation. This will be the last compensatory ‘pay’ that the Executive will disburse, since from January 1 the pensions will begin to be revalued by law and based on the average of the CPI of the previous year, instead of based on the forecast of inflation.

Eleventh month of uploads

With the November data, the interannual CPI adds its eleventh consecutive positive rate, according to advanced data published this Monday by the National Institute of Statistics (INE).

These figures represent a before and after with respect to 2020, since negative rates were recorded in nine of the twelve months of a year marked by the pandemic. Statistics underlines that in the interannual behavior of the CPI the increase in food prices stands out and, to a lesser extent, fuels and lubricantsfor personal vehicles, in contrast to the declines they experienced in November 2020.

For its part, the estimated annual variation rate of core inflation -general index excluding non-processed food and energy products- increased three tenths, to 1.7%, which was almost four points below that of the CPI general. In monthly rate, prices rose 0.4% in November compared to October.

For its part, the harmonized consumer price index (HICP) it also stood at 5.6% in the interannual rate and at 0.3% in the monthly rate. In this way, inflation, also known as the tax on the poor, once again reduced the purchasing power of Spanish wages and savings.

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From the government they continue to describe this scenario as a “conjunctural effect”, despite the fact that prices continue to rise and reduce the purchasing power of households.

In fact, the salaries in the agreement registered a rise of 1.55% until the month of October, well below the inflation figure, according to denounced UGT. After knowing the data, the Second Vice President and Minister of Labor and Social Economy, Yolanda Díaz, assured that the increase in the CPI is “purely temporary” and denied that inflation is related to the latest increases in the minimum wage and pensions.

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