Consumption shows "signs of exhaustion" due to the war

The major distribution companies in Spain have warned that private consumption shows "slight signs of exhaustion" caused by the war in Iran, at the annual meeting that the entity grouping them (Aecoc) held this Tuesday in Barcelona. Domestic consumption and investment have marked the good performance of the Spanish economy once the pandemic hecatomb was overcome. Now, the president of Aecoc, José María Bonmatí, has assured that "we are still in very positive ratios", but has warned that "the consumer confidence index is not particularly sky-high". "Crises begin and end when the consumer perceives it that way," he recalled.

Faced with the fear of second-round effects, that is, that prices increase because the seller passes on part of the increase in costs, Bonmatí replied: "We will try to contain inflation as much as we can so that the consumer does not have to do it." He warned that, for the moment, they are doing so "based on efficiency plans and restricting margins", but warned that "they will not be able to maintain it for much longer".

He stressed that mass consumption "is a strategic and at the same time vulnerable sector" due to its strong dependence on energy resources. He criticized the plan of measures of Pedro Sánchez's executive and asked that it "be more aggressive". "It has an impact of about 5,000 million euros on public coffers, but, on the other hand, the increase in IRPF and VAT revenue is 27,000 million," he assured.

On the other hand, the president of Aecoc dismissed any possibility that the conflict would affect supply chains. "The sector has shown many times in the past that it is a controlled risk", he defended, referring to the pandemic.

Impact on growth

Before the attack by the United States and Israel on Tehran, less than two months ago, the Bank of Spain predicted a GDP increase of 2.4% for 2026. Now it has reduced the forecast by a tenth, which would have become four without the Spanish government's aid package.

In parallel, the specter of inflation is once again looming over the economy: prices rose by 3.1% annually in March in Catalonia, a figure that far exceeds the 2% of the last month before the conflict. "GDP is growing due to consumption. If private consumption, which is the engine, is punished by inflation, we will start to see negative effects on GDP," summarized Bonmatí.

Loss of purchasing power

Still on the aspects that can slow down economic activity, Bonmatí lamented that real wages are lower today than in 2018, despite disposable income being "what most affects consumption". "For all the increases in the SMI [minimum interprofessional wage] that there have been, they have been totally mitigated by inflation and taxes," he assured.

He also criticized the price of housing – which he described as one of the biggest problems in the Spanish economy –, low productivity, and hyperregulation. He was especially forceful in attacking labor absenteeism, which he described as "a threat to companies and even to the entire system". Aecoc created an observatory this year to monitor the issue.