Concha Herrera, 60, says that meat and fish have become a luxury that she cannot afford this month. In a supermarket in Ríos Rosas (Madrid), she explains that she hasn’t bought them since the strike began, although she still has a few small reserves in the freezer. “My husband and I try to ration consumption so that it doesn’t run out so quickly. And, to compensate for the fact that we have fewer fresh products, we settle for legumes and sausages, which fortunately have not changed much in price…”. Instead, she warns that the rest has skyrocketed: “Potatoes, salad, onions…”, she recounts thoughtfully as she counts on her fingers. “But that is inevitable to buy, you will have to take vitamins somewhere,” she jokes.
Herrera still remembers the last time that Spain suffered such high inflation, which in March reached 9.8%. It was 1985. But an entire middle-aged generation is learning to live this year with price hikes they’ve never seen before. After six months of escalation, households are already beginning to adjust their habits, if not their belts. Not all of them do the same thing: some try to compensate for this increase in price by resorting to promotions and White marks, while others have so far decided to stock up for fear of running out of some products. The shortage of certain foods, such as milk or oil, caused by the war in Ukraine and the truckers’ strike, also plays a role there.
According to the consulting firm Kantar, during the two weeks after the Russian attacks, the prices of consumer products rose by 5% in all types of stores. The consultant has already detected that “all the chains have begun to transfer the increases in the price of the products”. Not even the big distribution companies have been able to contain that rise. And despite this, consumption increased by 13% due to the fear of many buyers of running out of the items that the war and the strike left off the supermarket shelves and whose price ended up skyrocketing: oil became more expensive from the March 6, 303% compared to the same period in 2021; pasta, 183%; rice, 181%; and milk, 145%.
Faced with this situation, consumers adopt different strategies. In general, the tactics are summarized in three: pull savings or credit, look for cheaper brands or buy less. The bulky data for March suggest that so far family reserves have been used, which had reached a record during the pandemic due to the impossibility of consuming. “The short-term reaction of citizens is to resort to savings to finance consumption, especially if it is in unpaid accounts,” says Raymond Torres, director of Coyuntura de Funcas, who recalls that the real value of bank deposits of the Spaniards has already been reduced by nearly 20,000 million euros as a result of inflation.
Less consumption in restaurants
That same reading comes from BBVA, which has registered a substantial increase in card purchases in March. Although in the last week (between March 22 and 28) these moderated and began to fall, spending was 31% higher than the same period in 2021 and 52% higher than 2019. “Not yet a correction is observed in the available consumption data as a result of higher inflation. To the extent that households perceive that this is transitory, they can draw on savings or credit to pay for this unforeseen event,” says Miguel Cardoso, director of Spain at BBVA Research.
He knows in depth all the sides of the coin.
In the early stages of the inflationary escalation, however, Kantar has found through a survey that a large group of consumers are looking for promotions on mass consumption products. Specifically, 40% of users say they do. “Consumers opt for two solutions. The first consists of a substitution of one product for another within the same group. For example, chicken instead of beef. The second is to replace products from different groups: it will be more difficult to save on transportation to go to work, but it will be more difficult to save on leisure,” he explains. Peter Aznar, professor at Esade. In fact, the Kantar study indicates that 40% of consumers say they are reducing their spending in bars and restaurants. “What is clear is that caution in spending is and will remain even if the economic situation improves and our actions are aimed at trying to control that spending through different measures,” agrees Alberto Iglesias, from the consulting firm NielsenIQ.
According to the Association of Manufacturers and Distributors (Aecoc), 37% of users opt for more items from the distribution brand and 34% look for better offers. But 15% are forced to go to the extreme: buy less. This is what María del Carmen Barreiro opts for, who lives in Lugo with her two children. She says that she has been noticing the rise in prices since November, but in March she suffered greatly. “Savings shot, but I also try to save a lot. It is true that, if before I managed to save about 100 euros of my salary, now there is nothing left to put in the account, ”she says. So she has to substitute one product for another: “Before, we ate heavy meals twice a week. Now, one every ten days, if we are lucky, ”she laments.
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