Officials and pensioners gain purchasing power due to negative inflation

Life is now somewhat cheaper than a year ago as a result of the pandemic. The outbreak of the virus in mid-March caused prices to collapse, which have remained downhill ever since. The year 2020 will close with an average inflation rate of -0.3% after the CPI moderated its fall to -0.5% in December due to the rising cost of electricity and fuel, according to the advance data published today by the National Institute of Statistics (INE).

If this data is confirmed, the CPI would accumulate nine consecutive months of decreases and will end the year very far from the increases registered at the end of 2019 (0.8%), 2018 (1.2%), 2017 (1.1%) and 2016 (1.6%). The last time prices closed a year negative was in 2014 (-1%), while December 2015 ended flat.

But this free fall in prices has caused pensioners and civil servants to gain purchasing power despite the serious crisis in the country. In other words, the incomes of more than 13 million people have improved throughout this year due to the rise in wages they have had and the collapse of prices.

Those who have benefited the most are the more than 3.3 million public employees (according to the latest EPA data). This group has increased its purchasing power by at least 2.3 points. This is due to the fact that this year their payroll increased by 2%, to which another 0.3% can be added if the signed agreement is fulfilled, as recently signed by the Ministry of Public Function. In the last three years, officials have seen their payrolls grow by 6.5% and have gained purchasing power, although it has not served to compensate for the loss of more than 10% they had in the previous economic crisis, when they suffered cuts and freezes.

But the nearly nine million pensioners have also risen for three years after having been doomed to a minimum revaluation of 0.25%. In 2020, they will have gained 1.2 points of purchasing power thanks to the 0.9% increase in their pensions, the same as last year.

In turn, workers governed by a collective agreement have also gained purchasing power this year if one takes into account that wages have risen on average by more than 1.8%. However, it should be noted that this has not been the case for the almost 7.5 million wage earners to whom it supports. And it is that almost four million workers have been welcomed to an ERTE at some point in the pandemic, with which their incomes have fallen, while another million people were fired by the crisis.

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