Not only does everything cost more, but they are giving us less: the industry adds reduction to inflation

Inflation has skyrocketed in Spain to levels never seen in almost 40 years, and there are those who are trying to take advantage of the situation to earn more at the expense of the already battered pockets of consumers. This is suspected by the National Commission of Markets and Competition (CNMC), a body that is investigating the evolution of prices to identify possible bad practices of commodity companies, such as inflating the sale price of their goods above the increase in production costs or reduce the quantity per package without properly informing about it, according to El País.

Unmarked at the moment. Competition has explained that it is monitoring the Spanish market for consumer goods with special attention to basic products, particularly after the rise in inflation experienced during the month of June, although it is still early to conclude that any of the companies investigated have made bad practices to take advantage of the situation and inflate their profits.

reduflation. The one who has already pointed out several companies is the Organization of Consumers and Users (OCU), which last week denounced Pastas Gallo, Danone, Pescanova, Colacao, Tulipán and Campofrío for giving less product to consumers, charging them the same amount and without informing them in advance, a practice known as reduflation. According to a study by the OCU, up to 7% of the items in the shopping basket of Spaniards have recently been affected by downsizing.

The consumer organization points out that, although the information on the packaging complies with labeling regulations, there is no clear information for the user about the price increase and this lack of transparency alters competition: “The consumer does not have complete information about the true nature and characteristics of the product, leading it to make erroneous decisions”.

Gasoline was just the beginning. The CNMC already announced a similar investigation last week on the increase in the price of gasoline. The agency concluded in a report that the gross profit margin (that is, income without counting the cost of oil and taxes) of service stations has increased like never before, which could indicate that some of these businesses are bloating prices and absorbing the government fuel subsidy to increase profits.

In fact, Competition reported then that it had located up to one hundred Spanish gas stations that have increased their profits at the expense of government aid, that is, in addition to not reducing the five cents that the Government required, they would have pocketed part of the 15 cents from public coffers.

Loss of purchasing power. Meanwhile, the inflation figures continue to break with the forecasts, for worse, almost month after month. Different economic sources pointed out between March and May 2022 that the Consumer Price Index (CPI) would not again exceed the annual maximum reached in March, of 9.8%, and that the average for the year would be around 7%. However, the latest data from the National Institute of Statistics (INE) have dashed that optimism: in June, the CPI reached 10.2%.

Therefore, we spend more and more on almost everything while the increase in salaries, which would help alleviate the pressure on the pockets of the Spanish, is stagnant. And it is that, according to INE data, the first quarter of 2022 (the last one for which processed data is available) would have increased by an average of 4.3% per year. Last year, with seven points less of inflation, rose 3.09%.

Image | Anna Shvets