The New Yellow Gold: Olive Oil Gains Again, Gains 116% in Three Years

There is no product in Spain that has grown as much as olive oil in the last three years. Neither gasoline, nor electricity, nor sugar, nor milk have risen in price as much as the new yellow gold since the start of the inflationary crisis in Spain. Since August 2020, olive oil has increased by 116%. That is, today one bottle of oil costs twice as much as just three years ago.

Prices are escalating unabated, according to the Consumer Price Index (CPI), whose details for the month of August were released this Friday. The price of oil increased by 18% in three summer months. 52% more than last year. The increase, which along with gasoline hikes, explains much of the increase in inflation in August.

A year ago, in August 2022, you spent €1,000 to cover all your needs: pay rent, bills, go out to dinner for a day or two, go to the supermarket and buy clothes. According to the National Institute of Statistics (INE), if you bought the same products, went to the same restaurants and bought the same things this year, you would pay 1,026 euros. This difference (2.6% more) is what changed, on average, the price level of consumer goods and services in Spain last year, as measured by the CPI.

What does this mean? That the price of beer, electricity or avocados has increased in the same way? No. This is an overall average of how much the cost of living has increased over that period. This means that there are services or products that may become much more expensive, others that have become slightly more expensive, or that some products are now cheaper than they were last year.

For example, in the following graph you can see how much (on average) major spending groups grew during last year’s price crisis, in the last quarter or last month, based on their weight in our monthly shopping basket.

Although this price crisis was born from the increase in the cost of energy, such as electricity, gas and fuel, food has increased the most in the last twelve months (+10.5%). Also today, compared to August 2022, alcohol and entertainment are 7.6% and 7% more expensive, respectively.

On the other hand, energy prices fell due to the base effect (a year ago electricity prices had already increased), due to measures such as the so-called The Iberian solution, which began in June 2022, an increase in electricity generation from renewable energies in Spain or an international situation of falling gas prices.

It should be noted that in January 2023, INE made some methodological changes to adapt the indicator to EU regulations. On the one hand, it involved consumers from the free market of gas and electricity (previously only coming from the regulated market).

On the other hand, it introduced new weights to create the shopping basket on which the CPI (percentage of the index that comes from each product changes) is calculated. Therefore, methodological innovations mean that the indicators of the general and different groups are not exactly comparable with previous months, especially in the case of energy, which can be reflected in artificial variations.

To check which products and services became more expensive and cheaper during the crisis, analyzed monthly CPI data for more than 200 different products from January 2019 to August 2023.

In the following graph, you can see how the price levels of the main spending groups (about 100 different groups) have developed over the last four years and seven months.

We know that the electricity bill, filling the tank or turning on the heating has increased a lot since the start of this inflationary crisis. But how much has the breakfast we eat every morning increased? Is dining out more expensive than it was a year ago? Does it cost the same to have a drink at the bar downstairs today?

To create our own index, we calculate how the prices of everyday goods and services have increased over the past year. The calculation is an approximation of price increases by applying the CPI variation to the average prices of the various products that make up the prescriptions or average costs of each service, based on the most recent available data. See for yourself in the following graph:

In a year and a half since the beginning of the war in Ukraine, the increase in the living wage in dozens of products is still noticeable. After declining in the first half of the year, inflation picked up this summer. Examples of this are sugar, which is 43% more expensive today than a year ago, potatoes (18%) or rice (22%). Furthermore, all these products continue to see price escalation unlike others where moderate increases are observed.

Apart from groceries, travel packages are also 13% more expensive than a year ago. The increase is joined by used cars, glass products and paper products, which have seen the most price increases since August 2022.

INE distributes price increases to the more than 200 products and services that make up our shopping basket. In the following graph you can see the price evolution in each of them. Click the button to see more products.

INE data indicates that 46 products in the shopping cart increased in price by more than 10% in the last 12 months. On the opposite side, we have several services and products that have become more expensive in the last 12 months: the price of electricity (due to the base effect, gas capital and falling international prices), computers and televisions or society. Transport, due to the impact of transport bonuses, such as discounts on Renfe, which the government approved a year ago and which came into effect in September.

The following table groups the price increases (or decreases) for each of the 200 product subclasses analyzed by INE to calculate our shopping basket price levels.

Source: El Diario





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