Just a month after the war in Ukraine began, Rita went shopping and was shocked to see that the price of cooking oil doubled and cost more than 3 euros per liter. Over 1 liter of the best olive oil available. This was a direct impact of one of Europe’s largest grain exporters suddenly withdrawing from the market. This is a slight result of shock waves spreading around the world, but it is more intense throughout Europe and is particularly vulnerable to both the reality of war and the effects of uncertainty caused by it.
Shortages of raw materials such as grains and steel, such as supply chain disruptions, soaring prices for goods, and soaring food production and logistics-riding energy bills, fertilizers as well as fuels, and prices from triple Containers that have quadrupled have all deteriorated in the last three months. Repeating the purchase made on March 24th, the price of 27 items paid € 40.72 will be € 52.47. A list that includes fresh and processed foods such as potatoes, coffee, croquettes, macedonia, cheese, butter, green broth, avocado, and some sanitary products costs an additional € 12.
If inflation exceeds the 0.9% recorded in 2021, for example, the value that served as the basis for renewing rent, and salaries for social benefits such as civil servants and old-age pensions will increase to the current 8%. (May) Life is not easy for the Portuguese family, the highest number in the last 29 years. Portuguese families have to face far more costs with virtually the same income.
According to Deco Proteste, which is following rising prices, inflation has created a basket of 63 products based on typical household consumption, such as fish, meat, vegetables, fruits, jams, pasta, flour and dairy products. Remains. -On average 10% more expensive. However, there are significant differences, from meat and fish whose prices have risen by 15% to 20% to vegetables and fruits that have not yet reached a 2% rise (see infographics).
Given that about a quarter (880,000) of Portuguese workers receive a minimum wage, or Portugal’s average monthly salary of just over € 1,000 (sixth worst in Europe). More than 10 euros will be added for every 40 euros Spending in a supermarket is difficult to fit into the household budget. It’s not just supermarket invoices that go up. Everything is more expensive. If there is no change in inflation and salary at current levels, or if it has changed by less than 1%, as in the case of civil servants, rising living costs are roughly equivalent to losing one month’s salary a year. To do.
“The scenario can get worse.”
The picture isn’t pretty and the outlook has never improved. Economists expect prices to continue to rise before they stabilize or begin to fall.For Daniel Traça, Dean of the Nova SBEThe million dollar problem is even when the climb is over. And the actions of the central bank and the government were instructed not to reach the answer of experiencing a recession by force. “For now, we have a cross-cutting impact of rising energy and food, and we don’t know how long. If wages aren’t curtailed, more inflation will occur and more drastic: Measures are needed. Interest rate shocks to avoid uncontrollable spirals, “he explains. Economists have pointed out the great uncertainty at the moment, “Look at the forecast for July three months ago and the current situation,” but believe that the situation will settle in 2023/2024. Until then, “you have to adapt to a slightly worse life.”
Also João Duke There are no signs of calm in the near future. “Prices will rise further” ISEG economist, We anticipate a great deal of horror in connection with the fourth quarter of this year. “It’s a time of rapid increase in heating gas and diesel consumption, and if Central Europe gets there without the necessary supply in time for what it needs, it will run into the problem of re-squeezing prices. “,resume.
Distribution is still unclear
The ECB itself is a reality that we haven’t known for decades, as inflation may not end immediately and inflation, which was thought to be combined and temporary, continued over time. I have already admitted that I am forced to relearn to live in. .. In particular, all the cushions that agriculture and food producers had that made it possible to delay the impact of rising costs are gone. It is unlikely that the international situation and government support will be improved to meet the requirements of producers and distributors. For example, agricultural diesel is 60% more expensive, electricity and natural gas prices have tripled, and containers have more than tripled. The prices are high and the entire logistics business is under pressure. The survival of the company needs to reflect some of the increased cost of products that reach the family.
“Unfortunately, there are no sustainable signs that inflation has peaked,” he admits. Goncarolo Xavier“Not only fossil fuels, but also gas and electricity will continue to be under pressure on energy prices in the coming months.” O General Director of the Association of Portuguese Distribution Companies (APED) Recall what happened this week at prices in Portugal and Spain, despite the enforcement of regulatory measures approved by Brussels.
“Uncertainty in the face of the Ukrainian conflict and the measures taken by the European Union (necessary but with consequences) are unlikely to stabilize or even reduce inflation. To the entire distribution chain. Pressure will continue, especially in logistics and production, and this will cause additional difficulty in claiming that it has not been mitigated by effective policies so far, “the officials emphasize.
An additional € 30 with a deposit
“Inflation is undesirably high and should have exceeded our target (2%) for some time,” said Christine Lagarde, president of the agency, already this month with inflation forecasts of 6.8% this year and 3.5 in 2023. Corrected to% and justified. The need to “take further steps in normalizing monetary policy.” The ECB’s 25 basis point rate hike was also postponed to July, at which point the euro countries’ asset purchase program was terminated. Euribor has already begun to rise, pulling in installments for 6-indexed mortgages. -Monthly interest (see text next to it).
Further pressure on family pockets is the price of energy, gasoline and diesel. These were already on the rise as a result of fossil fuel penalties and energy shifts that led to the closure of coal, for example. In Japan at the end of last year. Already at the beginning of February, war was added in addition to the decarbonization effect that pushed gasoline to 1.78 euros / liter and diesel to 1.63 euros / liter. As a result, consumer prices have exploded, the order of factors has changed, and at the end of March diesel became the first more expensive than gasoline (2.011 euros / liter, compared to an average of 1.987 for lead-free 95). Today, the types of fuel are almost indistinguishable. At yesterday’s average price, a 50-liter petrol tank costs 111 euros and a diesel tank costs 108 euros.
This means that between February 4th and today, petrol car drivers will spend an additional € 20 per deposit. With diesel, the difference is almost 30 euros.
Who is inflation suitable for?About tax revenue
There is a clear positive effect as all prices are soaring. It is to increase the state’s financial resources through increased tax revenues. If the price of an apple is high in a supermarket, the VAT rate imposed on it will be a higher standard, which will be a few cents higher for tax authorities. Multiplying this effect by everything we buy every day makes it easy to understand how much tax revenue will increase following inflation as long as consumption levels are maintained.
In Rita’s supermarket account, a VAT of € 6.76 paid in 40 payments was € 52, which was spent on the same purchase today, resulting in a tax of € 9.6.