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How to withstand inflation

2022-07-20 | Global news
How to withstand inflation

All over the world, from Iran to the US, inflation is skyrocketing, eating away at the purchasing power of wages and allowing corporate profits to bounce back at our expense. No consumer strategy can return us to the previous situation, but we are all trying to mitigate the devastation. What are working families doing to resist on a day-to-day basis?

1. Return to regulated electricity rates

In Spain the brutal rise in electricity prices started in May 2021. Basically the impact of the Green Deal was greater than the government had calculated... or so they said amid promises of corrections and palliatives that never did any good.

During the last few years, around 60% of families had gone from a regulated rate to contracting electricity based on the wholesale market price. In principle, it was a way to save money. But... when prices began to soar, so did the so-called "free market" bills.

So thousands of contracts switched back to the regulated rate, which is still a monopoly in the hands of distribution companies of the big five energy firms. So the big electricity companies for the first time snatched customers from the independent distributors. Some 200 of the 700 distributors have closed or stopped operations.

2. Re-doing vacations and leisure

Camping in France

Camping in Argelès-sur-Mer (French Pyrénées-Orientales)

In France, the first country where paid vacations were introduced, shifting consumption patterns are the topic of the summer in the press. Newspapers talk about the boom in rural tourism and camping in places closer and closer to the family home. Mediterranean beaches are no longer affordable.

In Spain, 43% of families have changed their vacation plans for this year, but the most significant thing is that the way of going out and consuming is changing, both in the city itself and at the holiday destination.

There is a reduction in shopping and eating out during the vacations and, when out and about, the average order is much smaller. The response of bars and restaurants is to implement a system of limited time at the table (maximum 15 minutes for coffee) and double shifts for lunch and dinner.

3. Changes in the basket and on the plate... without a change in diet

Watermelon

Watermelon, the fourth most consumed fruit in Spain, is at over one euro per kilo

It seems that relative price changes are making processed food more competitive in relation to fresh food. In other words, the conditions that led to food becoming a public health problem in countries such as the USA are beginning to emerge.

In spite of everything, the first signs speak more of a reduction in the quantity purchased and a strategic rebalancing. For instance, it seems that families have reduced oil consumption in general, but that olive oil is gaining relative weight against worse fats.

Fresh vegetables, which even in Navarra tripled in price, are beginning to be replaced by frozen vegetables for everything that is not raw. And the tomato from Almeria, which is breaking records in origin is bought less simply because the size of the average ration in households is reduced. And chicken -which "only" rose between 16% and 20%-, chickpeas and lentils are on the rise.

The summer helps: legume salads and gazpachos solve a good part of the menus and the price increase is partly offset by energy savings.

That is to say, it seems that families, especially working families, are resisting as best they can without leaving the cultural patterns of the Mediterranean diet. But should inflation keep on rising and wages not follow - the real [income deal] (https://es.communia.blog/economia-de-guerra-y-pacto-de-rentas/) - this defensive strategy will also cease to be sustainable.

4. Protests and strikes

Demonstration against inflation in Tirana

Demonstration in Tirana, Albania, against inflation this weekend

In countries like Morocco, Albania or Poland we have already seen a month of "citizens'" protests against the fall in purchasing power. In them the interests of the petty bourgeoisie, be they truck owners or farmers, try to instrumentalize the workers. But time and again they end up in government subsidies for small businesses without anything even being alleviated for the workers. That's at best. At worst, it drifts into the far right, as in the Netherlands.

This is barren ground: the problem is not the price of fuel or a particular input, but the reduction in the real wage per hour worked and thus the rise in price relative to income of all consumer goods.

That is why the strikes of British railway workers, Zimbabwean nurses, Iranian workers or US pilots ) make much more general sense and impact more the workers as a whole than any "popular" macro-demonstration.

What about this fall?

So far, the response of most workers is to deprive themselves of basic necessities and continue working without protesting. Until they die in some cases. But holding on won't help the situation to change. Why would it change if inflation is serving the recapitalization of companies?

When hypermarkets look worriedly to the fall it is because they realize that staple consumption, which they sell to us, is going to be very difficult after the summer. There will be less and less room to "adapt". And then, of the reactions we have seen, only one will be of any use: struggle.