Spain's 4.3% inflation rate feels out of touch with grocery bills and housing costs

4.3% CPI: core inflation reassures the statisticians, not the wallet

The set menu at Paco's restaurant now costs 32 euros and a 100-square-metre apartment is closing in on one million. Meanwhile, official inflation in Spain sits at a 4.3% that sounds like a euphemism to many. The figure, reported by El Mundo, has reignited the debate over how prices are measured: is this a temporary blip, or is the thermometer broken?

Behind the number lies a familiar divide. Those who point to core inflation argue that most of the increase comes from fuel —with the Strait of Hormuz as a backdrop— and from food, hit by a difficult harvest. By that measure, doom-mongering would be premature. But on the other side is everyday evidence: housing is not included in the calculation, and even the most cautious admit that is "nonsense".

The argument does not stop at statistics. With the cost of living climbing, pension policy comes into play. Some recall that pension uprating is tied by law to the CPI: if it closes at around 4.3%, next year's increase could be in the region of 5-6%. And that, some warn, will clash with the European Central Bank and Brussels, while the caretaker government leaves the mess to whoever has to deal with it next.

The most immediate effect, in any case, is seen in interest rates: inflation that refuses to be tamed complicates the hoped-for rate cuts. Every stubborn tenth of a point delays relief for mortgage holders and businesses.

And while the statisticians argue over core measures and components, ordinary people look at their wallets and do the maths. The official figures, one analyst quipped, are "a distant reference to reality". With set menus at 32 euros, few would bother to argue.