Spain is more exposed to food inflation than the rest of the large euro economies

The price of food has been one of the biggest headaches for European families in recent months, but especially for Spanish ones.

Spain is the country among the large economies in the euro zone that is most exposed to food inflation: these account for 25% of the consumption basket of Spanish families —compared to the 20.9% average for the euro zone —, according to a report published this Wednesday by the Bank of Spain.

In addition, their price increases contribute to general inflation more than in Germany, France and Italy.

The banking supervisor explains in his report that the sharp rise in food prices is a source of concern for two main reasons: firstly, the increase in food prices, which are part of the so-called "basic consumption", may imply a risk for access to healthy food and also force a reduction in spending on other types of goods or services, especially in the case of families with lower income levels, for which spending on food represents a more important part in their income and in their consumption basket.

Secondly, the researchers from the Bank of Spain add, spending on food is made more frequently than other types of spending,

Year-on-year food inflation increased from rates of less than 2% during the first half of 2021, to 13.6% in the euro area and 14.2% in Spain in the last quarter of 2022. The most exposed countries were the Baltics —Lithuania, Latvia and Estonia— and Slovakia, with rates above 20%, “due, at least in part, to the greater exposure of these countries to imports of food and fertilizers from Russia, Ukraine and Belarus” .

The rate used by the Bank of Spain in its report is the year-on-year inflation rate for food, beverages and tobacco measured in terms of the Harmonized Index of Consumer Prices (HICP).

With data up to the end of 2022, the banking supervisor points out that the increase in food prices in Spain has not been particularly different from that registered in the euro area, although "its contribution to general inflation has been more intense."

Food contributed to general inflation in Spain by 3.6 percentage points in the last quarter of the year, while in the euro zone they did so on average by 2.8 points.

Both Germany, France and Italy presented lower rates.

In the Baltic countries and Slovakia, the most affected, this contribution shot up to six points.

Among the large economies of the euro area, the weight of food in the consumer basket in 2022 reached 23.1% in Italy, 21% in France and 17.1% in Germany, all with percentages below the from Spain.

This greater exposure is explained, among other reasons, by the differences in per capita income, indicates the Bank of Spain.

While Italy, France and Germany exceed a

income of more than 30,000 euros, the average income per Spanish inhabitant in 2022 was 27,980 euros.

Thus, although Germany presented higher food inflation at the end of the year, German households dedicated a smaller part of their spending budget to food than Spanish households.

Of course, the Bank of Spain recalls that, although it is not part of the study presented now, in January 2023 a "tax reduction for some basic foods approved by the Government" came into force in Spain, which could affect comparisons that are do in the future.

According to the latest inflation data available, in Spain food rose by 16.6% in February compared to the same month in 2021, despite a lower tax burden.

In the euro zone, they climbed to a record 15% year-on-year.

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