European families create strategies to reduce the loss of inflation

Recently, when going to the supermarket in Vallecas, a working-class neighborhood in Madrid, teacher Ruth Fernandez Jesús has become accustomed to buying 15 liters of olive oil at once. Not that she’s going to stock a restaurant kitchen or anything. The purchase is just for her family of four, but it should last for months in the pantry. This is her strategy to combat inflation, a novelty in the lives of most Europeans.

“The 5-litre olive oil, which I always buy, was costing €25 (R$139) in July. Now, it’s €28 (R$156)”, says Ruth, highlighting a 12% increase in the price of the product. “Olive oil will certainly continue to rise. Since it doesn’t spoil, I started to buy three bottles.”

Although inflation has existed since the creation of the euro in January 1999, it had never surpassed 4.1% per year, the rate registered in August 2008 until November of last year, when it reached 4.9%. A year later, the rate for the last 12 months is at 10%, an astonishment for a generation that has lived most of its life treating inflation as a minor concern.

A resident of Vallecas, a working-class neighborhood in Madrid, Ruth has a couple of teenage children and her husband, after spending four years studying in professional courses, has just managed to change his old job as a car painter to that of a computer technician.

For the same reason, she anticipated shopping for this Christmas by more than a month. “Everything goes up even more when it comes close to the parties, so, as I have a freezer, I already bought the meat and fish, like cod and salmon”, she says.

“Now, what is absurd is the price of fresh food. Eggs have gone up a lot and so has fruit. I can no longer buy bananas from the Canaries [ilhas espanholas no Atlântico]🇧🇷 The Chilean ones, which are not as good, are cheaper, even coming from farther away.”

When it comes to food, the growth in the cost of living is even more discouraging. If the general inflation rate in Spain has fallen in recent months (from 10.7% in July to 7.3% in October), the food and beverage sector is the one that puts most pressure on daily life: 15.5% inflation in October of this year. In the euro zone, the same number is repeated.

Of course, the rise in grocery bills slides into family habits. “We love going to the theater,” says Ruth. “But we haven’t been in a year.” She remembers only one other time in her life when prices were so frightening. “That was when the pesetas became the euro”, she says, referring to the moment when the euro was adopted as the currency of Spain (and ten other countries), on January 1, 1999.

“That year, the euro started out costing 166 pesetas. But everything that cost 100 pesetas, like a cup of coffee, for example, started to cost €1. There was a rounding up, an increase of 66% overnight. Now, we feel more in food and gas and light bills.”

Regarding gas, the main villain of the increase in the cost of living in Europe in 2022, due to the Ukrainian War, Spain got away with it. As it is a major producer and relies on the product coming from Africa, the country has seen an increase of just 2.6% in gas and electricity in the last 12 months. In Europe, on average, inflation in this sector is currently 23.2%.

But an increase is an increase, and the family of Alberto Alfaro and Maria José Moreno is literally feeling the effects of this inflation firsthand. Residents of Coslada, a municipality on the outskirts of Madrid, they were forced to lower the temperature of the heating at home.

“Last year, we had snow in Madrid, so it would have been harder. But this year we decided to lower the temperature and, instead of wearing a T-shirt at home, we wore a shirt”, says Maria José. So far, the temperature in the Spanish capital this winter has not been much below 10ºC.

She is unemployed after being fired a few months ago from a telemarketing service. Before, she had worked in the same role for Coca-Cola for 20 years, and had a salary of around €1,400 (R$7,807), but was laid off in the pandemic. Her husband is a self-employed electrician and earns between €1,800 and €2,000 (R$10,038 and R$11,153) in a good month. The family still has Álvaro, 15, and Daniel, 9.

The drop in revenue, combined with inflation, led to a change in several habits. A dinner out with the four of you cost between €80 and €120 (R$446 and R$669), depending on the restaurant, but that doesn’t exist anymore. Alberto started to cook at home, and not just the trivial: “I always liked to cook, so I started asking them what they wanted to eat. Anything. Japanese? Italian? Mexican? I’ll do it.”

The kids approve, especially when he makes the special recipe of pancetta, pickled onions and cilantro wrapped in lettuce. But boys feel the problem too. Álvaro says that, recently, when he goes out with his friends, the gang has been crowdfunding to pay for fast food for a friend who has no money. “Some of my friends’ parents are not able to give them money, so we get together and pay for the hamburger for those who can’t”, he says.

In the supermarket, Maria José also innovated. Her strategy was to switch to own brands, which bear the name of supermarkets, such as Carrefour or Dia. Instead of Fairy detergent, for example, which costs €4 (R$22), she now takes the supermarket brand, which costs €1.20 (R$6.7). “Lays fries cost €2 (R$11). The supermarket one is almost half,” she says. “Danone yogurt costs 40% more than the equivalent of white brands [próprias da rede de supermercados]”, approves Alberto.

But some products simply disappeared from the family pantry. Maria José loves kombucha, an effervescent drink made from fermented tea. “But a bottle costs €6 (R$33) and you can’t afford that anymore.” In addition, she now only buys wines that are on 2-for-1 promotions.

Even though he has never dealt with such high inflation, Alberto is optimistic. He thinks the moment is one of the best to live in the history of Spain. “We didn’t go hungry. Our parents and our grandparents went through wars. When Franco was the dictator, in the 1960s and 1970s, there was hunger in the small towns. The class difference was greater. Today there are many social services to help families I don’t know what the future will be like for my children, but the Spain of today is not comparable to that of 50 years ago.”