The vertiginous price of electricity is mainly responsible for the rise in the rate. The last time Spain experienced such a high inflation rate was in 1992.
Consumer prices increased at least 6.7% in Spain during the last month of the year compared to the same month the previous year, and annual inflation says goodbye to 2021 with the highest level not registered in three decades.
Flash data from the National Statistics Institute (INE) revealed this Thursday, December 30, that high electricity rates contributed to the annual price index skyrocketing to a 29-year high. Food prices also increased significantly in 2021, after an overall decline during the previous year.
The last time Spain had an annual inflation rate of 6.9% was in 1992. It also had that rate in 1989 when the country faced a rapid economic expansion after joining the European Community.
Inflation is Unforgiving
In the United States of America, the consumer price index report for November also presented an increase of 0.8%; it brought the inflation rate to 6.8%, which is its maximum in almost 40 years.
The president of the Central Bank of Europe, Christine Lagarde, expressed that this region differs from North America where inflation appears to keep ongoing.
While the United States Federal Reserve highlights that inflation will continue indefinitely, the Central Bank of Europe sees an opposite scenario for its region. The entity highlighted that the current inflation in Europe is the highest in history, being 4.9%, while in the United States of America, it reached 6.2%.
To achieve the objective of lowering inflation, it would be necessary for the Central Bank of Europe to reduce the printing of euros. The entity expressed that, in effect, the issuance of banknotes has crumbled down since December 2020. This situation differs from the United States of America, where this issuance has not stopped growing since the pandemic started.
Against this background, bitcoin takes center stage because the cryptocurrency is seen by many as a store of value. This perspective takes place considering that one of the features of bitcoin is that the maximum number of coins that can get created will only be 21 million.
On the contrary, a country like the United States of America, Spain, or any other in the world, has the power to increase its money supply. In this way, spending and purchasing government bonds reduces the purchasing power of fiat money and thereby inadvertently generates inflation for the population.
Even investing in bitcoin has been a good alternative to survive inflation in countries facing a hostile economic environment, such as Venezuela, whose year-on-year price increase stood at 769%.
By taking refuge in bitcoin, a Venezuelan or an Argentine was not only able to withstand the blows of inflation but also, in just three years, they would have multiplied their funds by more than ten times.
By: Jenson Nuñez
