Economic network

People are pressuring governments around the world to take action against inflation

BARCELONA, Spain (AP) – Óscar Baños and thousands of other truck drivers celebrated on Saturday after a threat to idle their engines prompted the Spanish government to adopt measures to improve working conditions and control the soaring fuel costs due to inflation.

This is the latest effort by workers, opposition leaders and citizens to pressure governments in Europe and the Americas to intervene as soaring consumer prices put pressure on households and businesses.

Baños loves hauling freight across Spain like his father did before him, but was prepared to lose much-needed cash on a three-day work stoppage just before Christmas. After days of negotiations, the trucking companies called off the action Monday through Wednesday after Spain’s transport ministry agreed to requirements including checks to help cushion the blow from rising diesel costs.

“I spent 1,500 euros ($ 1,694) more in October on the same liters of diesel as the year before,” the 48-year-old man said recently while carrying a load of rubber. “With this price, it’s impossible.”

Following the breakthrough, Baños is cautiously optimistic: the deal has “some positive things that now need to be put into practice. We will see.”

Political pressure has led countries like Poland, Hungary and the United States to take measures such as putting caps on gas prices, pledging money for poor households or releasing gas prices. oil from strategic reserves. Spain was among places like Turkey that saw more intense efforts such as protests and work stoppages linked to complaints about inflation, which rose as the global economy rebounded from the pandemic, increasing the demand for smaller energy supplies and aggressive supply chains.

As governments take action, they have few effective resources to provide meaningful and lasting relief, economists say, offering short-term aid that is unlikely to do much to tackle the price spike. It depends on central banks, some of which have started to raise interest rates to reduce inflation.

Inflation in Spain is at its highest level in 29 years at 5.5%, and like countries around the world, one of the main drivers is energy costs: gasoline has increased by 63% , while electricity for households and businesses increased by 47% over the last year.

This week, dozens of tractor-trailers slowly passed through Madrid in a “slow march” protest. Many truckers believe that while they helped keep the country running when Spain entered a shutdown at the height of the pandemic, they are being left behind by Europe’s focus on a larger economy. green that switches from diesel engines to electric vehicles.

The government concessions on Friday night included regulations to make hard work easier and attract young people: a ban on drivers from loading and unloading trucks and an end to long waits at their destinations. Spain has also guaranteed a mandate that all trucking companies increase their tariffs based on diesel costs so that competitors don’t undermine each other, eroding profits and driving some to the brink of extinction.

“It’s not just about fuel prices, but they affect our results and the economic viability of our businesses,” said Carmelo González, vice-president of the Spanish Confederation of Freight Transport, who led the discussions with the government.

“This 35% increase in diesel fuel costs is killing us,” he said.

Jaume Hugas, professor of logistics, innovation and data science at ESADE business school in Barcelona, ​​said inflation is a common thread in protests from different sectors of the Spanish economy. Steelworkers’ strikes last month turned violent and farmers rallied against high prices.

Hugas sees the problem of Spanish truck drivers spilling over to other countries like the United States and Britain, where a shortage of drivers forced the military to secure gas supplies.

“This industry has suffered from a long decline and has received virtually nothing” from the authorities, Hugas said. “I think with the global collapse of trade that we have seen in Chinese ports and in the United States, rising fuel prices were the straw that broke the camel’s back.”

Other governments are under pressure to act on energy prices.

With inflation at the highest level in 39 years, US President Joe Biden freed 50 million barrels of oil from the US Strategic Petroleum Reserve in a bid to cut energy costs and announced an agreement for the port of Los Angeles operates 24/7. reduce backlogs in supplies. But economists say these stocks are unlikely to make a big difference in the price spike anytime soon.

Hugas said the only short-term measure that produces relief, albeit limited, is “the removal of fuel taxes as prices rise to stabilize them somewhat.”

Hungary instituted a cap on gasoline and diesel costs at the pump as prices hit record highs. It comes as the right-wing ruling party faces elections in the coming months that pose the most serious challenge to its power since being elected in 2010. Some economists have called it a political decision that will bring some relief. to households but could lead to a drop in gas. closed stations.

In Poland, the government blamed the European Union’s anti-coal climate policy for high energy prices, but the head of the International Energy Agency said an increase in demand for fuels fossils play a more important role. Opposition lawmaker Michal Krawczyk recently said that the ruling Law and Justice party has hung too much on coal and that “your policy, not the EU’s, got us there.”

“This year’s Christmas will be the most expensive of this century,” he said. Opposition leaders are pushing the government to help people in the central European country where consumer prices have risen 7.8% over the past year.

Poland’s lower house of parliament last week passed a measure promising cash grants to poorer families for energy bills. Aid will range from 500 to 1,250 zlotys ($ 122 to $ 305) per household, Prime Minister Mateusz Morawiecki said.

It’s part of an anti-inflation plan that also includes tax cuts on electricity, heating fuel and gas for vehicles, officials said.

“The anti-inflation shield will not answer all the problems – it is not possible – but it shows that we are doing everything possible to alleviate this inflationary pain, to reduce costs for Polish families,” Morawiecki said.

In Brazil, where inflation has accelerated to 10.74% – its fastest rate in 18 years – and where some poor people are feeding on leftover meat for protein, his only complaint during protests against the government of President Jair Bolsonaro in recent months.

In response to rising prices, the country’s central bank raised interest rates, also this week by the Bank of England and the Norwegian central bank.

Turkey, meanwhile, is cutting rates. President Recep Tayyip Erdogan insists that high interest rates push up consumer prices, contrary to conventional economic thinking. The 21% inflation has left a lot of difficulty in buying basic commodities such as food.

Thousands of people joined a rally in Istanbul on Sunday to protest the skyrocketing cost of living and demand a higher minimum wage. On Thursday, the government announced it was raising the monthly minimum by 50% from 2,825 lire ($ 171) to 4,250 lire ($ 258).

“When we go to the market, we have to be selective. We buy a quarter of what we used to buy, ”union representative Ahmet Goktas, 61, said on Sunday.

Hatice Sahin, 50, a city worker and single mother of three, said people couldn’t make ends meet.

“Food prices are exorbitant. We just can’t live, ”she said.


Associated Press journalists Monika Scislowska and Vanessa Gera in Warsaw, Poland; Emrah Gurel in Istanbul; Suzan Fraser in Ankara, Turkey; David Biller in Rio de Janeiro; and Frank Jordans in Berlin contributed to this report.

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