Neither the data from the INE (Spain’s National Statistics Institute) nor European statistical services capture the true scale of one of the expenses that suffocates citizens most: housing. The CPI only accounts for rental prices, and with a minimal weighting of just 5%—whereas in the U.S., for example, it represents 40% of the index. Consequently, the Catalan Generalitat has developed a proposal for a new indicator—reported today by the newspaper EL PAÍS—to supplement inflation data with this essential cost. By giving housing a 34% weighting, the results are definitive: the rising cost of housing over the last decade has wiped out any gains in purchasing power.
If we use 2014 as a base year (100), the Spanish CPI has risen by 23% since then, while gross salaries have increased by 25%. This would suggest a two-point gain in purchasing power (though, in reality, social security contributions have also risen and income tax brackets have not been adjusted for inflation). However, if housing prices are included in the inflation calculation, the new CPI shows an increase of 32%.
