The inflationary crisis of recent years has left a mark that continues to be present even though annual rates rise or fall. From December 2020 to August 2026, the general price level in Spain has increased by approximately 26.96%, using the official data from the Consumer Price Index (CPI) and the advance published for this month.
Translated into a daily amount, a representative basket of goods and services that needed 1,000 euros at the end of 2020 would now cost around 1,269.64 euros. If the initial expenditure were 2,000 euros, maintaining equivalent consumption would require approximately 2,539.28 euros.
How the accumulated increase since 2020 is calculated
The chosen starting point is December 2020, immediately before the strong inflationary acceleration that began during 2021. The calculation uses the variations of the national general index published by the National Institute of Statistics.
Between December 2020 and July 2025, prices increased by 21.7%. In July 2026, the CPI was 3.6% above the same month in 2025. Finally, the leading indicator for August estimates a monthly increase of 0.7%.
The rates cannot be added directly. They must be chained by multiplying the successive changes, because each increase is applied over a price level that already incorporates previous increases. From that procedure, an approximate variation of 26.96% results since the end of 2020.
A basket of 1,000 euros now costs almost 1,270
The simplest way to visualize the change is to transform the percentage into amounts. An expenditure equivalent to 100 euros in December 2020 currently represents about 126.96 euros.
A basket of 500 euros becomes about 634.82 euros; a basket of 1,000 reaches approximately 1,269.64; and a reference of 2,000 euros is now around 2,539.28 euros.
These amounts do not represent the specific budget of a Spanish family. The CPI measures a weighted average consumption basket, while each household distributes its spending differently among food, housing, transportation, leisure, energy, and other services.
1,000 euros from 2020 today have a purchasing power equivalent to about 788
The same phenomenon can be observed from the opposite side. If a person had kept exactly 1,000 nominal euros since December 2020, without that amount having increased, those funds would today have a purchasing power equivalent to approximately 787.63 euros from then.
The loss of purchasing power of that fixed amount is, therefore, around 21.24%. It does not contradict the increase of 26.96% in prices: they are two distinct percentages because they are calculated on different bases.
If a basket goes from costing 100 euros to 126.96, its increase is 26.96%. To find out what purchasing power a quantity that has not increased retains, the inverse operation must be performed, dividing by the new price level.
The escalation began in 2021 and reached its peak in 2022
The change in scenario began to become evident during 2021. Spain started that year with an annual inflation of 0.5% and ended it with the CPI at 6.5%.
The pressure intensified in 2022. Inflation reached 10.8% year-on-year in July, the peak of that period, and still remained at 10.5% during August.
The rates subsequently began to moderate, but this deceleration did not eliminate the accumulated increase. Prices simply started to grow at a slower pace from levels that had already increased significantly.
Why lowering inflation does not mean prices will fall
A reduction in the inflation rate does not imply that products automatically return to prices prior to the crisis. It only means that, in general terms, they continue to increase at a slower speed, as long as the variation remains positive.
If a product goes from 100 to 110 euros and the following year its price increases by 2%, it does not return to 102 euros: it reaches 112.20. The inflation rate has been significantly reduced, but the price remains above its initial level.
For the general index to decline, a negative variation in prices would be necessary. That is why households can continue to perceive a very high cost of living even after leaving behind episodes of double-digit inflation.
August adds pressure to the cost of living again
The evolution of 2026 adds a new segment to the accumulated increase. The CPI rose 0.3% monthly in July and reached an annual rate of 3.6%.
The leading indicator for August now estimates an additional increase of 0.7% compared to the previous month and an annual inflation of 4.3%. The INE identifies fuels and lubricants for personal vehicles among the main factors explaining this acceleration.
The figure corresponding to August is still provisional. The accumulated calculation of 26.96% will need to be slightly adjusted if the definitive data modifies the monthly estimate known this Friday.
The increase in prices does not equate to the real loss of each family
Knowing how much the CPI has increased does not automatically determine how much purchasing power each household has lost. To calculate it, one would have to compare the evolution of prices with the growth of wages, pensions, and other income of that family during the same period.
A household whose income had remained completely frozen would fully suffer the loss of purchasing capacity derived from the increase in prices. If their income had increased in a similar proportion, it would have compensated for a much larger part of the impact.
It also matters what each family consumes. Those who allocate a large part of their income to fuels, food, or energy may experience a different evolution of the cost of living than another household whose budget has a different composition.
The CPI measures prices, not the wealth of households
The Consumer Price Index measures the evolution of the price of a representative basket of goods and services. It does not directly measure how much money Spaniards have, their savings, their assets, or their disposable income.
That is why it would be incorrect to state that "households have lost 27% of their money." The result that can be sustained with the data is that the general level of prices has increased by around 27% since December 2020.
The difference is fundamental for correctly interpreting the calculation. Money does not disappear due to the CPI effect, but it loses capacity to buy the same amount of goods and services when prices increase faster than income.
The calculation is pending the definitive CPI of August
The estimate uses definitive data up to July and the advance of the CPI for August. The National Institute of Statistics provisionally places the monthly variation for this last month at 0.7%.
If that figure is confirmed, the accumulated increase since December 2020 will be around 26.96%. A revision of the monthly data would also slightly modify the final result.
The magnitude, in any case, allows observing the cumulative effect of almost six years of inflation: what required 1,000 euros at the end of 2020 requires today approximately 1,270 euros. Keeping incomes frozen during that entire period would have meant a loss of purchasing power close to 21%.