Inflation continues to squeeze family budgets, and the pace shows no sign of slowing. The late-year relief seen at the close of 2022 proved short-lived as the Consumer Price Index (CPI) turns upward again, with the shopping cart as the central driver. In Alicante, food prices rose by at least 16.9% last year, contributing to a 2.2% overall rise in February. In fact, the notable monthly energy increase pushed year-over-year inflation to 6.3%. The outlook remains uncertain, with experts forecasting that this trend could persist in the coming months.
Last July, the CPI in Alicante mirrored national patterns, peaking at 11.2%. A gradual decline followed, bottoming at 5.7% in December, suggesting a softening trend. Yet, at the start of the new year, that momentum faded as the cost of goods continued to climb despite a government VAT cut on essentials. This erosion in price relief underscores ongoing pressure on households.
Energy costs continued to rise in February, reinforcing the inflationary pressure across the Valencian Community. Fresh legumes and vegetables posted increases of about 9.7%, while fresh fruit rose 8.2%. On an annual basis, more pronounced gains appeared in essentials: sugar climbed 46.7%, milk 33.8%, oil 33.3%, and eggs, among others, up around 25.4%. The purchasing basket still faced elevated costs, with March data signaling persistent strain.
The February period also showed a 3.9% uptick in energy prices after recent restraint, alongside increases of 1.6% in alcoholic beverages and tobacco, 1.5% in entertainment and culture, and 1% in restaurants and hotels. Transportation rose modestly by 0.8%, and clothing and footwear by 0.5%.
Year over year, energy prices fell by 9.9%, yet food, spirits and tobacco, furniture and household goods, and services in hospitality and leisure all posted gains. The mix of rising food costs with steady or falling energy prices highlights the uneven dynamics shaping the region’s consumer market.
Inflation and employment contribute to higher tax collection in the province
The persistent price pressures complicate the economic outlook, making it hard to predict when relief will arrive. A professor of Business Organization noted that several factors influence prices, including external shocks like geopolitical conflicts and financial disruptions in major markets. The current period shows that short-term policies struggle to rein in food prices because the supply chain remains lengthy and intricate before products reach the final consumer.
Another scholar points to strong demand from multiple European economies and supply-chain frictions as key drivers of the price increases seen in the shopping basket. She emphasizes that Alicante’s role as a producer of vegetables and fruit can lead to higher inflation locally compared to other regions, underscoring the regional nuances that shape consumer costs.
BBVA Research adjusted its 2023 growth forecast for Spain’s GDP to 1.6%, trimming its 2024 projection from 3.4% to 2.6%. The revised outlook reflects optimism about avoiding energy-restriction scenarios and easing production costs, as explained by the research team’s chief economist. The update highlights the balance between resilient demand, energy dynamics, and structural factors shaping economic growth in the near term. (Source attribution: BBVA Research)