Inequality mirrors inflation, a link confirmed by the Bank of Spain. Its analysis shows price increases hit households unevenly, with food and energy driving the rise while the spread of higher costs remains moderate overall. Lower income households feel the impact more sharply, facing a price rise about 1.4 percentage points higher than higher income households.
The June price surge exceeded forecasts. The Bank of Spain projected 7.2 percent, Funcas estimated 8.5 percent, yet INE data showed a 10.2 percent increase, among the sharpest climbs since 1985. The acceleration extended beyond food and energy into other sectors such as transportation. A Cáritas spokesperson described the moment as unusual for many families, noting that the ongoing pandemic shock keeps many individuals trapped in a cycle of social exclusion rather than a mere setback. A bold policy response is needed to address this crisis.
Several recent studies corroborate the persistence of inequality across Spain. The 2022 World Wealth Report from Capgemini indicates that both the number of wealthy individuals and the value of their assets rose in 2021, while Funcas highlights ongoing poverty. Severe material poverty has risen for three consecutive years, with the youngest groups bearing the highest burden.
Caixabank Research carried out an innovative study using more than three million payroll records and advanced Big Data methods to monitor wage inequality in real time through the pandemic. The results show that the crisis disproportionately affected lower wages, especially among young workers and immigrants. In classic Gini terms, wage inequality increased significantly by early 2020, then narrowed under public policy support. While it has dipped toward pre pandemic levels, the gap remains wider than before the 2008 financial crisis.
EsadeEcPol, the center for economic policy, has analyzed two decades of income inequality using a distributive national accounts framework guided by Piketty. The findings reveal higher inequality levels with this approach than in earlier studies, and they show how taxation, transfers, and public services help reduce differentials. Public revenue alone seems insufficient to narrow gaps; redistribution relies heavily on public expenditure and welfare programs.
Data show that the share of the top 1 percent in national income rose from 13 percent in 2007 to 17 percent in 2019, while the bottom half had yet to recover its pre-2008 income. The research also confirms that government action through taxes, transfers, and services such as health and education plays a key role in smoothing income disparities. Tax changes, especially to wealth taxation, have altered the path of redistribution in recent decades.
For the richest 1 percent, business income constitutes less than a third of total earnings, with financial capital exerting a stronger influence on overall wealth due to favorable taxation. This evidence suggests that the present tax system makes limited adjustments to income inequality, and public redistribution is mainly achieved through spending rather than tax revenue alone.
Taken together, four conclusions emerge: inequality rose after the financial crisis, the pandemic delivered another blow widening the gap, and inflation driven by the war in Ukraine has again widened the difference between the poor and the rich. Government action continues to justify redistribution primarily through public spending rather than relying solely on tax collection.
Analyze metrics
Understanding the measures aimed at mitigating price rises or softening their impact on household purchasing power is essential. National Accounts data reveal the household quarterly balance where a slowdown in consumption coincides with a downturn in GDP growth.
There is a sense that both government authorities and the European Central Bank view current inflation as temporary and tied to the war. Recent commentary suggests a disinflation trend may begin later this year and continue into the next year, shaping policy expectations.
The Central Bank has responded with measured steps, refining its timetable for public debt reduction and nudging interest rates upward by a modest amount. If Spain’s inflation dynamics mirror those of other euro area economies, a further small uptick in policy rates could occur.
Policy makers are exploring measures to curb price rises, especially through tax relief and targeted supports for those with the lowest incomes. Broad anti inflation tools that address supply shocks and demand, such as comprehensive income accords, are not being pursued at this moment.
As with historical crises, a broad national political and social pact could help steer the country through this period. The idea evokes the famous Moncloa Pacts and invites reflection on whether a modern version could foster a more resilient and inclusive recovery.