A millennial's old-soul take on real inflation
How much has the cost of living really risen since 2007? An analysis of real inflation and its impact on wages.
English · Original discussion in Spanish · Published
The perception that real inflation has been close to 10% a year since 2007 may be exaggerated; a more careful calculation suggests an annualized 3%, which changes the perspective on purchasing power.
The debate about real inflation — the kind we feel in our pockets, not the one reflected in official statistics — is a classic. Much is said about how indices, such as the **CPI**, are "dressed up" with substitutions and adjustments that don't always capture the consumer's reality. And yes, it's true that since the financial crisis of **2008**, a huge amount of money has been injected into the economy.
## The cost of living: a 10% jump?
Until recently, one could think that real inflation was close to **10% a year**, based, for example, on the rise in gold since **2000**. If we apply that rate to a salary of **25,000 euros** in **2007**, today's equivalent would be astronomical, exceeding **168,000 euros**. Clearly, one would live much better today on that money than two decades ago, which clashes with reality: in **2007**, a salary of 25,000 euros, while decent, did not allow you to buy a home in the best neighborhoods of **Madrid**.
## A more down-to-earth calculation: 3% annualized
If we adjust the lens and consider real inflation of **3% annualized** over those same 20 years, the salary equivalent to 25,000 euros in 2007 would be about **45,000 euros** today. This figure, while still representing an increase in purchasing power, feels much more consistent with the evolution of the labor market and the cost of living. A salary of 45,000 euros today allows you to live well, but it is not a fortune by any means.
## Perception versus the data
It seems that, despite suspicions about manipulation of CPI figures, real inflation has not been as outrageous as some antiestéticared. The idea of **10% a year** made us think of brutal impoverishment, but an annualized **3%** adjusts that perception. It is possible that, even with low interest rate policies after the **2008** crisis, inflation remained contained in those years.
The debate about real inflation — the kind we feel in our pockets, not the one reflected in official statistics — is a classic. Much is said about how indices, such as the **CPI**, are "dressed up" with substitutions and adjustments that don't always capture the consumer's reality. And yes, it's true that since the financial crisis of **2008**, a huge amount of money has been injected into the economy.
## The cost of living: a 10% jump?
Until recently, one could think that real inflation was close to **10% a year**, based, for example, on the rise in gold since **2000**. If we apply that rate to a salary of **25,000 euros** in **2007**, today's equivalent would be astronomical, exceeding **168,000 euros**. Clearly, one would live much better today on that money than two decades ago, which clashes with reality: in **2007**, a salary of 25,000 euros, while decent, did not allow you to buy a home in the best neighborhoods of **Madrid**.
## A more down-to-earth calculation: 3% annualized
If we adjust the lens and consider real inflation of **3% annualized** over those same 20 years, the salary equivalent to 25,000 euros in 2007 would be about **45,000 euros** today. This figure, while still representing an increase in purchasing power, feels much more consistent with the evolution of the labor market and the cost of living. A salary of 45,000 euros today allows you to live well, but it is not a fortune by any means.
## Perception versus the data
It seems that, despite suspicions about manipulation of CPI figures, real inflation has not been as outrageous as some antiestéticared. The idea of **10% a year** made us think of brutal impoverishment, but an annualized **3%** adjusts that perception. It is possible that, even with low interest rate policies after the **2008** crisis, inflation remained contained in those years.
Also available in: Deutsch
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (1 replies).
More summaries
-
The Dhammapada meets spiritual inflation on a Spanish economics forum
A thread about the Dhammapada on an economics forum draws everything from mockery to reflection. Why does a Buddhist text irritate so much in materialistic Spain?
-
Euribor rises to 3.374% while September average nears 3.2%
Euribor rises by 0.048% to 3.374%, while the September average hits 3.166% versus last year's 2.172%. The variables are under scrutiny.
-
Deutsche Bank Foresees a New Era for the Global Economy: Scarcity, Frequent Inflation Spikes, and Governments Unable to Control It
Deutsche Bank predicts a new economic era defined by scarcity, inflation, and the limits of traditional policies. Discover the critical factors.
-
Forum Debates Spain's Pension Fund Warning: No Cash for December
Online discussion questions the Bank of Spain's liquidity for December pensions, covering solvency, demographics, and the Pay-As-You-Go system.
-
PANCHUSO (2026)
"The Housing Problem" [Oil on canvas]
Madrid, Spain
A post circulates "The Housing Problem", an oil painting attributed to Ayuso in 2026. Housing has become the central issue of political debate in Spain.
-
There is no PSOE state of mind, just a lost Spanish right that only wins by fluke
A viral message mocks people calling in sick on Mondays and Fridays and links it to voting. The link between absenteeism and the election campaign is up for debate.