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The companies transferred a “substantial” part of their costs to the sales prices

Date: May 29, 2024 Time: 20:40:01

Spanish companies transferred to sales prices “a substantial part” of the increase in their production costs in 2022, although “strong heterogeneity by sector” is observed. It is one of the main conclusions of the article published this Monday by the Bank of Spain (BdE), in which, however, there is no direct impact of these higher costs on variables such as employment and the average salary.

In the Document, Entitled “The Pass-through of the INCREASE in Production Costs to the Prices of Non-Financial Companies in 2022”, It is Detailed That the Main Economic Sectees Would Have Produced “A Very High, Practically Complete Pass-through”, both in the short period (compared to 2021) as in the long (compared to 2019).

However, it should be noted that in the electric power and gas and refining sector “sale prices grew more than their unit costs” if compared to those of 2021, and the same is true, although “more” . moderate” in other branches “such as transport and storage and hospitality”.

In the case of these last two sectors, the body led by Pablo Hernández de Cos explains that it could be due to “the strong recovery in demand experienced in 2022” after the lifting of the restrictions set during the pandemic, which “would have put pressure on the sales prices”. Compared to 2019, sales prices increased “to a greater extent” in the field of electricity and gas and refining, but they also did so in wholesale trade and construction.

The Report Also Includes Detailed Data About The Industrial Sector, And Points Out That “The Absolute Pass-through Of The INCREASE IN COSTS PRODUCING Sales Prices, Between 2021 And 2022, Would Have Been High, Although Incomplete, While Regarding 2019 “the absolute pass-through would have been almost complete, and greater than that observed in the short term”.

Regarding this difference, the document published by the regulator explains that “it may be due to the slowness with which companies adjust their sales prices in the face of changes in their costs”, and also to a “more intense increase in production costs “. ” in 2021, which would have meant that some companies had a greater need to pass them on to avoid a drop in their margins.

The rise in costs does not impact employment or average wages

The Bank of Spain adds that “high heterogeneity is observed” in the results depending on the subsectors, which may be due to “the flexibility with which prices are adjusted in each one of them”. Finally, the report published this Monday analyzes the effect of the variation in unit costs of inputs (excluding wages) on different business variables, such as unit sales price, deflated sales volume, employment, average salary, productivity and unit labor cost, between the years 2021 and 2022.

The results of the report also show that the increase in the cost of inputs has a positive impact on sales prices and a negative impact on the actual volume of sales. The latter would be reflecting “the drop in demand as a result of the price increase.” On the other hand, the direct impact on employment and average wages is nil, and this “may reflect the rigidity of these variables in the short term”, while labor productivity decreases and this “generates, in the short term, an increase “. of the unit labor cost”, maintains the document prepared by the entity.

* This website provides news content gathered from various internet sources. It is crucial to understand that we are not responsible for the accuracy, completeness, or reliability of the information presented Read More

Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.
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