One clear takeaway from recent months is that economic headwinds have grown more intricate for Spanish families, especially in Valencia and across the broader region. Inflation keeps climbing, shaping an increasingly expensive shopping basket for the typical household. Mortgage payments have become tougher to manage, with some rates rising to around 3.5 percent last week, and the cost to run a household continues to press on budgets. The conflict in Ukraine has added additional strain. Yet, despite these adverse conditions, consumer spending shows resilience, even as purchasing power slowly deteriorates.
Last week, the wage-focused Adecco Employment Opportunities and Satisfaction Monitor highlighted that the typical salary in the country stands at 1,823 euros, a figure that underscores the strain on household budgets. The data suggest that consumer buying power is now at levels last seen in the mid-1990s. Regional manager Víctor Tatay of Adecco Levante notes that the squeeze on purchasing power is closely tied to inflation, which has kept pressure on household budgets and, by extension, on consumption patterns. The uptick in living costs is a key driver shaping this dynamic.
higher food cost
The shopping cart serves as a clear indicator of these shifts. In February, overall food prices rose 17.1 percent from the prior year, with staples like fats, milk, and sugar climbing by more than 33 percent. Such steep increases push some items out of reach for routine purchases. Joaquín Cerveró, spokesperson for the Anged Community of Valencia, which represents major distribution companies, explains that food consumption, especially fresh items such as fish and meat, has been pressured. He notes that this is compounded by the lack of a VAT reduction in January. Consequently, average household purchases may shift toward discounts and store brands as households adapt to the new price reality.
Nevertheless, despite rising prices, retail sales have shown resistance. The National Institute of Statistics (INE) reports that the deflator index, which neutralizes price effects when measuring retail trade performance in the autonomous region, remained higher than the late 2010s, suggesting a steadier performance even as prices climbed. The broader implication is that consumer activity has not collapsed; spending patterns are simply evolving in response to cost pressures.
Cerveró adds that categories such as apparel, cosmetics, home goods, and electronics are moving toward more normal spending levels. In other words, consumption has not shrunk; it has merely shifted in response to the price environment and the available choices for value-conscious shoppers.
The hotel industry is developing
A parallel trend appears in the hospitality sector, where turnover rose in Spain by around 44 percent compared with 2021, according to INE data. Industry observers anticipate a continued improvement in employment prospects in the coming months, with strong growth signals in tourism. As Tatay and Cerveró emphasize, the recovery in tourism activity is contributing to positive returns in the broader economy. Even amid a challenging macro backdrop, consumer demand shows signs of endurance, suggesting that sectors tied to travel and leisure may lead the way toward a broader stabilization in the near term.
Across these observations, the common thread is resilience. While prices push at household budgets and living costs tick higher, consumer behavior remains adaptable. People adjust by reallocating spending, seeking better value, and leveraging opportunities in sectors that can drive growth, such as tourism and services linked to travel. The result is a nuanced recovery where overall consumption holds steady, even as individual price pressures persist. The outlook remains cautiously optimistic, with continued attention to inflation trends and policy responses that influence disposable income and household confidence.