The effects of CPI increase on disposable income: an analysis for Spain by CGE

Abstract

Spain is the European country where the differences between the highest and lowest incomes have increased the most in the last decade. In addition, the rise in prices would have repercussions on household disposable income, impacting income distribution and, consequently, poverty rates and inequality could even deepen the gender gap. In this context, our paper aims to analyse the impact of the increase in the Consumer Price Index (CPI) in 2022 on the disposable income of Spanish households. To do this, we employ a Computable General Equilibrium model calibrated with a Social Accounting Matrix disaggregated by income deciles and gender of the main income earner.