Monthly Inflation Lower & more –15th June 2023

Buenos días from Gracia! This is the Rorshok Spain Update from the 15th of June twenty twenty-three A quick summary of what's going down in Spain.

Kicking off this week's episode, on Tuesday the 13th, the National Statistics Institute (or INE) released the final data for May's Consumer Price Index (or CPI), and things have slightly improved. The CPI is mostly used to measure inflation, and this May, inflation moderated to around 3%, down from just over 4% in April.

Core inflation, affected by energy and food prices, also decreased to just over 6%, the lowest level of core inflation since July twenty twenty-one. Price rises are slower, mainly thanks to cheaper electricity and fuel. However, food shopping remains pretty high, 12% more expensive than in May twenty twenty-two, especially on basic items, forcing the Government to maintain the VAT reductions until the end of this month when they will review it based on the market.

While the Government debates maintaining the VAT cuts, right-leaning parties VOX and the People's Popular Party or PP have different priorities.

Since the PP won the majority of the regional and local seats in the elections, they have been negotiating with the fascist party VOX over a coalition in areas where they didn't get a landslide to prevent the left from governing.

In the Valencian region, including Valencia city, Alicante and Castellon, Sevilla, and Valladolid, in particular, a pact between the two parties is particularly important because these areas were typically left-leaning, meaning that the PP advanced, but didn't gain an absolute majority in May's elections, so they need Vox’s support.

Vox is also preparing for the 23rd of July snap general election. If the PP fails to win by absolute majority, they will need Vox's support to assume office, meaning Vox could form part of the national Government. Yikes.

Moving on to investment portfolios, according to Nati-xis Investments Managers, Spanish investors have been reducing their backing of European stocks over the past seven years. Previously, European equities made up about 50% of their total investments; now, they represent about 20%.

Likely this trend is due to market maturity, as more people try to diversify their risks by investing in multi-country and multi-company assets worldwide rather than national companies.

Continuing with Europe, the strawberry debacle we spoke about in last week's episode continues, as the group of German delegates canceled its investigative trip.

A group of German delegates was due to arrive in the South on Monday the 12th to investigate claims that Huelva strawberries are produced with depleted water reserves from the Doñana National Park wetlands. This is highly controversial because the Andalusian regional Government wants to expand water extraction rights in the wetlands because of droughts - the park is home to some of Europe's most important migratory birds and pine forests.

The group of delegates cites the upcoming Spanish elections and ongoing arguments between the regional and national Governments for the cancellation, saying they hope to continue talks later.

Flying within Europe could get a little more complicated as more countries scrap or reduce short-haul flights to encourage people to take less Co2-heavy methods to get around.

Last week, France catalyzed the idea when they officially announced that any journey which could be taken in under two and a half hours by train could no longer be taken by plane. Along these lines, they also announced that they would provide more trains to ensure that travelers can spend at least eight hours at their destination.

So, will Spain follow suit? In twenty twenty-one, Spain presented a plan to ban short-hauls where journeys could be made by train by twenty fifty, essentially stopping flights from Madrid to anywhere on the mainland. However, at the time, backlash from the aviation industry put plans on hold. Other EU countries that have also made shorter journeys more expensive and increased taxes are Austria and Germany, so let's see where Spain lands in this debate.

Also up for debate is the exhumation of the remains of those who fought in the Civil War, though this one has already begun.

On Monday the 12th, a team of forensic scientists, archaeologists, dentists, and geneticists set up a laboratory inside the Basilica of the Valley of Cuel-gamuros, formally known as the Valley of the Fallen. As part of Spain's Justice to History Memory Law, they are working to locate and identify the remains of tens of thousands of people in unmarked graves, allowing family members to mourn their ancestors and give dignity to the dead.

However, PP leader, Alberto Núñez Feijóo, has said that should he win the General elections in July, he will repeal the law, meaning that all the hard work already done could be fruitless.

Want to find out more about the historical context of this story? Link in show notes.

While the last story was based on historical context, this next one is more of a modern issue. On Tuesday the 13th, the two alleged architects of a major Crypto scam under the unregulated crypto exchange platform Globix were set to take the stand in a Gibraltar court.

Sole shareholder and Globix boss Damian Carrears, alongside tech officer Pavel Sidirov, were supposed to be quizzed after liquidators noticed that almost forty million euros vanished from Globix crypto wallets after investors were locked out of their funds in early twenty twenty-two.

However, the crypto-currency con man did not turn up to testify via video conference, nor did his tech counterpart, so they are now facing arrest warrants over contempt.

Shifting gears to the population now, according to INE statistics, low birth rates continue to be a big issue in Spain.

On Wednesday, the 14th, the INE revealed that data on births throughout the country during the first quarter, including April, have decreased. Around one million people were born, 1.70% less than in the same period the previous year.

To understand the regional data, the autonomous communities where the birth rate has fallen the most compared to the same period in twenty twenty-two are Asturias at -7.6%, Navarra at -7.3%, Murcia at -6.75%, and Cantabria -at 4.6%. In contrast, Madrid and Aragon are the only regions where the birth rate has grown, with 0.44% and 7.7% respectively.

Changing subjects now, if you happen to be in the Galician region, head to Cambados, a coastal region famous for wine and freshly caught seafood, especially clams.

The Shellfish Pickers' Association of Cambados meets almost daily, making the most of the low tide, plodding around in rain boots, and racking up all kinds of seafood to later sell to the region's restaurants.

Groups of mostly women have been collecting clams and other sea stuff for generations, as it became a deep-rooted tradition when there were no other options to make money for women of the Lourizan village when their husbands went to sea. In the past, this type of job was heavily looked down upon, with people calling them scavengers.

However, as the practice has become more accepted, digging rules had to be enforced. Each worker is allowed around ten Kilograms of two different types of clams daily; anything that can't be sold is put in the clam fields, jobs are regulated, and each worker must have a permit.

Still, if you do travel to Spain, watch out for entry requirements because, depending on where you come from, you might be required to prove solvency.

British passport holders, in particular, are being warned to check if their passports meet EU and Schengen Area's validity rules, as visitors could be asked to show proof of return. In addition, now that the UK isn't in the EU, visitors could be asked to show proof of accommodation and sufficient means to cover the trip, which is set at 109 euros per person per day. These rules are randomly spot checked; however, visitors might need to show proof via a bank statement, cash, or traveler's cheque.

To find out more, head to the show notes!

And that's it for this week. Another quick question. How are we doing on bias? Ax grinding? We try to be independent and stick to the facts and context with favor and fear of none. How are we doing? So do we seem even a teensy bit biased? Tell us at spain@rorshok.com

¡Hasta la próxima!