The inflationary spike in Spain between 2021 and 2023: evidence from micro data

Rationale Analysis of the price micro data used to construct the consumer price index (CPI) allows us to understand how much of the inflationary spike observed in Spain between 2021 and 2023 was attributable to changes in the number of outlets adjusting prices (the “adjustment frequency”), rather than to changes in the size of such price adjustments. Takeaways •The rise in the year-on-year growth rate of the CPI in 2021-2023 was marked by notable increases in the number of outlets that raised their prices from one month to the next, with the size of such price adjustments remaining practically constant. •There is evidence of asymmetries in the upward and downward price adjustments made by outlets: given the same gap between a posted price and the estimated optimal price, the number of outlets making an upward price adjustment towards the optimal price exceeds those outlets making equivalent downward adjustments. This asymmetry has become more marked during the recent inflationary period.