Government maintains pension increase at 8.5% for 2023 despite moderate CPI

Inflation maintains its pulse despite signs of a weak economy. Although the rise is moderate, the prices of major daily consumer products are still much more expensive than a year ago. The The consumer price index was 6.8% in November, according to advance data released by the National Institute of Statistics on Tuesday. This is the third month in a row that inflation has broken pockets with an increase of less than 10%.

However, despite the moderation in the rise in prices, the consequences of the inflationary “rise” are already weighing on the economy as well as on the government’s budget plans for the next year. Among the items most affected by the consumer price index are pensions. Benefit revaluation is calculated each year by averaging the resulting CPI for the twelve months prior to November.

With 6.8% recorded in the penultimate month of the year, the rise in pensions should be close 8.46%In line with government provisions, and in accordance with the law that entered into force early this year to determine the annual update of retirement and other benefits provided by social security.

Deviation from expectations 8.5% That the government worked with in order to prepare public budgets is minimal, barely 0.04%. In terms of budget, the difference in the amount invoiced to apply the exact figure is barely 60 million euros. So finally the executive branch will apply the now announced increase for more than two months to cover the loss of purchasing power for the more than 9 million retirees already enrolled by Social Security.

See also  The European Central Bank is warning banks that they are not properly registering risks

However, given this circumstance, sources close to the concerned ministry tell ABC that Scenario Subtract four tenths To the expected increase in public budgets has not been thought of. “With the current data, the rise will be 8.5%,” they noted. However, we must remember that the stats provided advanced inflation data on Tuesday. Therefore, we have to wait for the final confirmation of 6.8% for the government to start preparing the decree that will determine the amount of revaluation next year.

The most expensive climb in history

This obligation which the government has obtained to comply with this legal principle to the letter has a great cost to the public treasury. Specifically, the body headed by Minister José Luis Escrivá must pay some money 15.300 million in euros. Only for the rise of 8.5%, which would be the highest in history.

This exchange, then, will only correspond to a revaluation. This means that it will be added to the bill of more than 190,000 million euros that the country will bear over the next year. And it does not stop there, within this amount the effect of retirement baby boom whose production has already begun, which, according to experts, also imposes an additional cost of about 4,000 million euros due to the substitution effect, which means that new services are on average 20% more expensive than those that come from the system.

The evolution of pension spending

Data are in millions of euros and

% of the total state budget

Line: Ministry of Finance and Public Administration / Ministry of Labor and Social Security

has evolved

of pension spending

Data are in millions of euros and

% of the total state budget


Ministry of Finance and Public Administration /

Ministry of Labor and Social Security

The package of measures taken by the government in recent months to curtail the evolution of prices, in which it has allocated around 20,000 million euros of budgetary resources between tax cuts, bonuses and direct aid to vulnerable families and the most affected sectors, took effect at the right time, when the time came to calculate the revaluation of pensions. .

Just two months ago, it was The CPI averaged 8.7%.Therefore, the sharp moderation that the index experienced in the last part of the year, in which it fell from 10.5% recorded in August to 6.8% in just three months, saved the government, and in particular on social security. around 360 million euros.

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button