Good news for Alicante workers’ pockets. The price surge seen in recent months was, for the first time since February 2021, cooled last June. The salary settlements agreed in the state are set to surpass inflation data, allowing wages to reclaim buying power after almost two and a half years of erosion driven mainly by higher raw material and input costs. The pandemic and the Ukrainian war contributed to those pressures, and now the trend is easing, albeit slowly.
The improvement remains modest and does not fully compensate for the losses already suffered in recent years. In fact, calculations published this Wednesday by the INE show that the province’s inflation rate fell to 2.1% in June on an annual basis, down from 3.3% in May. Although this is slightly above the national rate of 1.9%, it marks a significant improvement when compared with the 10.4% price rise in the same month a year earlier.
More importantly, the figures are still below the anticipated target. The province’s collective agreements include a negotiated average salary increase of 2.95% for the year, according to the Ministry of Labor and Social Economy. That means a difference of 0.85 percentage points above the inflation rate maintenance. The question now is whether this trend will persist through the rest of the year.
Alicante workers have accumulated a loss of purchasing power of about 1,300 euros in two years
In terms of salaries, the outlook should continue to rise in line with the national agreement between CC OO, UGT and CEOE employers. The plan calls for a 4% rise in 2023, 3% in 2024 and 2025, plus an additional 1% if inflation exceeds these levels. The challenge is that this raise is not mandatory, and with inflation retreating, companies and industry employers may be wary of committing. Still, the potential gains are substantial. If 2021 and 2022 data are any guide, wages rose by an average of 4.7% while inflation climbed by about 12%, underscoring the real purchasing power lost over the period.
Time will reveal whether prices maintain their current moderation, a trend supported in part by lower fuel costs in the United States and the corresponding pullback in electricity prices. In Alicante, the entire energy component became cheaper by as much as 32% versus June 2022, helping to ease overall consumer costs.
most expensive food
On the other hand, food prices remain a pain point, continuing to rise at a double-digit pace, though the rate has softened slightly in recent months. By June, the shopping cart in Alicante was about 10.4% higher than a year earlier, a level just a notch above the national figure. The sugar market remains the most inflationary segment, with around a 41% jump over the last year. Milk rose about 19% and potatoes roughly 18.6%. Meat costs climbed about 15.8%, and mineral water posted a 10.6% increase. Fresh fruit, however, declined by about 5.1%.
Food consumption drops by almost 5%, while family spending rises to 11.4%
The government faces pressure to extend VAT relief for basic goods, though consumer groups had urged wider relief. The measure was broadened to cover more products, aiming to ease household budgets, even as food costs remain a central concern.
Beyond food, other categories show price pressures. Tourist package deals rose by about 24%, hotels by 10.6%, and cars by 7.6%. Entertainment and culture also posted gains around 6% compared with mid-2022, illustrating the breadth of inflationary effects across the economy.
Industry agreements show stronger gains
The wage increases negotiated in the province tend to be higher within sectoral contracts than within individual company agreements. Up to June, forty-eight company contracts in Alicante averaged a 2.79% increase, versus 2.96% in the twenty-six sectoral contracts. The overall average of 2.95% still trails the national increase of 3.26%.
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