The sum is also increasing: Hemingway enthusiasts and other tourists in Spain face a higher rate of inflation than in the United States.

It’s an early summer afternoon in Madrid, and the world’s oldest restaurant is abuzz with a cacophony of tourist and local voices, knives and forks, bottles and glasses.

But just as the famed Restaurante Botín is seeing business return to normal after the Spanish capital’s pandemic shutdowns, it has another challenge ahead: soaring inflation. Retail prices in the Iberian nation jumped 10.2% in June, a 37-year high and one of the highest inflation rates in the eurozone.

Economic report: US Inflation Begins To Calm, Signals This Favorite Fed Price Gauge

The costs of keeping the lights on and diners cool at the 300-year-old establishment have been a hardship, said co-owner and manager Antonio González, who estimated his electricity bill was about 70% higher. than a year ago. Yet it only passed on 2% to customers.

“We probably can’t raise prices any more because we survive on our customers and you can’t tell them, ‘Look, prices are going up 10% because my costs are going up that much. People won’t understand,” González told MarketWatch in an interview last week.

Spot power prices in Spain averaged $162.26 per megawatt-hour between June 4 and July 4, lower than Germany’s $236.41 but more than double $72.75 of the United States during the same period, according to data from the International Energy Agency. The invasion of Ukraine by Russia and the disruption of world commodity markets.

Lily: Euro will slide to parity with US dollar unless natural gas situation improves, Citi strategists warn

Resting at the foot of the Plaza Mayor, Botín is directly in the path of some of the city’s busiest tourist traffic. This keeps the four available floors of the restaurant occupied, including the famous cavernous room and the 16th century wine cellar, accessible by a small staircase. The restaurant, bought by González’s grandparents in 1930, has, in addition to its location, two other good fortunes in its favor, according to their grandson: Hemingway and history.

The Botin Restaurant’s former wine cellar dates from the late 1500s. Pictured is

Market observatory/KOLLMEYER

“We had lunch upstairs at Botín. It is one of the best restaurants in the world,” Ernest Hemingway wrote in the 1926 novel “The Sun Also Rises,” about the restaurant famous for its roast suckling pig and lamb dishes. In 1987 Botín earned a place in the Guinness Book of World Records as the oldest restaurant in the world.

Near the medieval Villa Plaza, not far from Botín, two American travelers worked up an appetite for dinner at the restaurant, which was on their list of Hemingway haunts to visit. While they probably wouldn’t notice a slightly more expensive menu, Danielle Walsh, 35, and her wife, Jessica Schilling, 29, had seen plenty of inflation elsewhere.

The Boston couple told MarketWatch that their two-week tour of Spain began with a ticket to Portugal, purchased in February, before war broke out on European soil.

“We actually chose to go to Porto because flights to Spain were more expensive,” Schilling said. They then jumped on a plane to Seville, observing that “small flights were very expensive”, and flew to Granada, Barcelona, ​​then Madrid.

The couple expressed their surprise at paying €3, or $3.13, for a bottle of water in Barcelona, ​​when a meal in the Catalan capital was never less than €40 or €45 (about $41 or $46), although you could dine for €10 ($10.30) in Granada.

But their biggest shock came from a visit to a Spanish gas station. “It was so high,” Walsh said of the pump price. “We had a Mini. We used a half tank from Sevilla to Granada and had to fill it to get back [the rental car]and filling half a tank on a Mini, which I can’t imagine being that big, was €45,” she said.

They said buying a half tank of gas for their small SUV at home would have cost half the price, although they acknowledged that gas prices have also risen in the United States. . Indeed, average gasoline prices per liter in Spain averaged $2.47 in June, down from $1.44 a year ago, according to GlobalPetrolPrices.com. In the United States, the price was $1.355 in June and $0.904 that year.

Extract from the archives (March 2022): Russia’s invasion of Ukraine adds to inflationary pressures and ‘disrupts’ the stock market, strategist says

Fury over high petrol prices in Spain sparked a crippling 20-day strike by truckers in March, and the government recently presented a €9.5 billion package to help protect Spaniards, including a 20 cent rebate on a liter of fuel which was extended at the end of the year, a reduction in taxes on electricity bills and direct government relief checks for the poorest families.

MarketWatch/Barbara Kollmeyer

The Sunday view towards Calle de Cuchilleros, where the Botín restaurant is located, from the Plaza Mayor.

Among locals, inflationary pressures have endangered their cherished summer holidays. Hotel chains in Spain are reportedly raising prices by up to 15% to cope with higher costs, while global market research platform Appinio separately found that 30% of Spaniards surveyed will cancel their holidays this year due to high inflation.

Central banks around the world have struggled to contain soaring prices, exacerbated by war and the residual effects of the pandemic. May’s inflation rate in Turkey topped 70%, while retail prices rose more than 50% in Argentina. Russia’s inflation rate was over 17%. Eurozone inflation hit a record 8.6% in June, and a European Central Bank meeting later this month is expected to result in the first interest rate hike in more than a decade.

Economic report: Canaria in the coal mine? Spain’s inflation rate hits a 37-year high of 10.2%.

Despite high prices and airline schedule problems, Americans remain eager to satisfy their pent-up travel cravings as the pandemic wanes.

“As of June 25, US flight bookings for travel to Europe in July and August were at 96% of pre-pandemic (2019) levels and bookings for Spain were at 91%. The three most popular destinations for American travelers this summer are expected to be Turkey, 75% ahead, Portugal, 42% ahead and Greece, 39% ahead,” said Olivier Ponti, vice president of information at ForwardKeys, a company travel data and analytics.

See: Flight cancellations drop slightly as crowded 4th of July weekend draws to a close

The Plaza Mayor in Madrid, pictured on July 3, 2022

Market observatory/KOLLMEYER

At Madrid’s busy Mercado food market, Denver native Alex Rodriguez was enjoying local cuisine at the end of a 10-day trip to Spain with his wife and several other family members.

Rodriguez, 37, said prices seemed reasonable in Spain when he thinks back to his student days in London in 2008, when a pack of cigarettes cost you $10. “Over here, our mini bar, water prices, wine, seems so much cheaper to me and even from back home we travel a lot around the country, we took a mini bar, right? not? And it’s by far the cheapest I’ve seen,” he said.

But he admits that as a two-income household – he works as a lawyer and his wife is a primary school teacher – they are probably not as hard hit by global price spikes as others.

Rodriguez said he booked his trip through a travel agency, paying just over $10,000 per person. He also thinks Spain just aren’t that busy as they haven’t had to wait at any of their stops. “We can take our selfies and have no one in them, but at the same time I understand the people around her are probably hurting.”

One American who won’t be crossing the Atlantic anytime soon is 28-year-old English teacher Christian Kelley. Living in Spain for six years now, three of them in Madrid, he is skipping a trip back to Boston this year because the flights are just too expensive.

“Round trip from here to Boston was pushing $800 to $900 for August through TAP Portugal, which is one of the cheapest,” he told MarketWatch. “Previously you could get it for $450 [or] $500. »

Comments are closed.