Sellers begin to transfer costs at prices and unleash second round effects

The final consumer is already noticing in the few days that range from 2022 how sellers have decided to move at final prices the rise of costs that have been su

Sellers begin to transfer costs at prices and unleash second round effects

The final consumer is already noticing in the few days that range from 2022 how sellers have decided to move at final prices the rise of costs that have been suffering for a few months.

The IPC had been giving months that prices are rising with respect to last year, but to date the economists agreed that the increase was transitory -provocked among other things due to the base effect and the imbalance between supply and demand after the pandemic- and in which it was mainly due to the increase in energy.

The DECEMBER DATA, however, (rise of 6.7% in the general index and 2.1% in the underlying -in energy and fresh food-), has questioned the temporality of inflation and there are those who warn that the dreaded effects of second round are already a reality.

Refer to the possibility that price increases can initiate an inflationary spiral by one of these two ways: if companies end up attending workers' pressures and access rising in accordance with inflation, or if they decide to move the increase of Costs of supplies at the final rates charged to the consumer.

Although the translation via salaries is still contained (salaries by agreement rises 1.49%), generalized price increases are already detected in many products, not only energy and food.

"The rebound of inflation (up to 6.7% year-on-year in December) again overcome the forecasts and can not be ruled out that it has been due, at least in part, for second round purposes," said Rafael Doménech, chief economist. From the BBVA studies services by knowing the CPI advance of December.

Raymond Torres, director of economic conjuncture of functions, specifies the world that "is taking second round effects on the prices of the products more exposed to the increase in all kinds of natural resources (electro-intensive sectors, furniture, paper, etc. .) ".

Salaries, on the other hand, "are acting at the moment as a containment dike," he says, with which the second round effects are only occurring in a sense.

In addition to small commerce or hospitality, large companies like Ikea have already announced price increases for this year before the rise in costs. If these rises are generalized, the second round effects will be palpable and the central banks will have no choice but to harden their monetary policy. Until now, it clings to the elements that allow them to think that inflation will be moderated (as the fact that salaries are contained and consumer goods have not been fired).

The European Central Bank has not raised an increase in interest rates because it would be very harmful to economic recovery, but if they expand the second round effects, it will not be more remedied than to upload them.

"There are elements that paint regularly. The new omicron variant has increased pessimism on value chains and these are those that influence the price of intermediate goods. I think the production chains are going to keep jammed and will continue to rise the Prices of many products, which is going to force many companies to raise prices, "says this Middle Enrique Féas, principal investigator of the Royal Elcano Institute.

The General Council of Economists took advantage of this Monday updating its economic forecasts to warn that inflation begins to be structural.

"The increase in the prices of energy products is being affected by the producers, which is influencing the prices of the rest of the products. This makes the increase in inflation no longer cojunctural, but, in part, Be structural, "they warned.

In this same line, the PMI index published by the consultancy Markit reflected that the industrial sector companies are gathering materials before fear of a lack of supplies and, given that the price of these inputs continues to rise hard, they are already moving it At final prices.

"The December Survey indicated that the rates charged increased at a slightly slower rate than the series record observed in November, since companies faced another rapid increase in the costs of the inputs. The companies surveyed commented that The vast majority of raw materials have risen priced, as well as costs related to energy, electricity and transportation services, "they collect.

January is a month in which the prices traditionally fall, among other things, it is worth it, alerts Gregorio Left, General Director of the Institute of Economic Studies (IEE), but even this year the great surfaces will moderate their discounts before the Rise of costs, which will contribute little to deflate prices.

This expert is still optimistic about the evolution of prices. "They will not produce second-round effects in a generalized way as they occurred in the past. We think there is awareness in the first place that it is transient and, secondly, that the second round effects could aggravate inflation and do it Persistent, instead of solving the problem, "he says.

Updated Date: 07 January 2022, 01:44

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