Recent consumer price index figures show inflation easing for the fourth straight month, landing at 6.8% in November. The decline follows slower costs for electricity and gasoline, weighing on overall prices. If the National Institute of Statistics confirms the latest figures, the twelve-month inflation rate would stand at about 8.458% through November. This trajectory implies several policy implications: Social Security pensions are expected to rise around 8.4% in the coming year, though the final numbers are still being finalized. The 8.4% uplift is just under the government’s initial forecast inside the current budget discussions. The minimum living income is projected to follow a similar rise. Airef’s projections suggest that a one-tenth lower pension increase could reduce the budgetary outlay by roughly 150 million euros.
Inflation fell to 6.8% in November due to lower electricity and gasoline costs
Following the pension reform enacted earlier, November inflation remains a key signal for determining next year’s pension increases. From now on, pension values will be reviewed each year based on the average inflation over the twelve months ending in November of the previous year; both months are included, drawing on the December 2021 to November 2022 period. Inflation had already risen to 6.5% in December 2021. The Ukraine conflict pushed energy and other prices higher in early 2022, with a peak near 10.8% in July. Since then, inflation has steadily cooled. The latest twelve-month average is around 8.4%, while November’s 6.8% figure, approved by the INE, reflects the ongoing downward trend.
With the new pension revaluation framework tied to the prior year’s inflation, the January adjustment no longer relies solely on an estimated figure. The system avoids upward deviations from forecasts, ensuring a more stable increase path for pensions.
According to Airef, each percentage point of pension growth translates into higher spending. An 8.5% increase, for example, would add about 12.75 billion euros to Social Security, a figure already incorporated into the 2023 State Budget proposal.
Beyond the November inflations impact on pension levels, the INE release marks another step in addressing price pressures the Government aims to soften in 2023. The 6.8% annual rate is four points below the July peak of 10.8%, highlighting a notably rapid decline compared with many EU peers. Government officials view the drop as evidence that price-control measures are working to limit increases across the economy.
Additionally, core inflation—excluding energy and highly volatile food prices—held steady at about 6.3% in November, underscoring persistent underlying price pressures even as energy costs ease.