From €1 to €1.70: the coffee that reveals the monster
Back in 2005, a cortado cost around €1; today, in 2025, the average is roughly €1.70.
It’s not that your barista is now serving a high-altitude Ethiopian single origin… it’s simply called inflation.
And if that increase feels “manageable” to you, remember that in 1989 Argentina lived through
200% monthly inflation; what cost €1 in July shot up to €10 by December.
What exactly is inflation?
Pocket definition: a general and sustained rise in prices.
It’s not enough for gasoline to go up; an entire basket of goods has to get more expensive.
In Spain, the INE tracks 479 products.
If that cart cost €100 a year ago and today it costs €104, we have a CPI of 4%.
The three burners that heat up the CPI
- Demand > supply — The post-lockdown boom is the perfect example.
- Energy and wage costs — When the electricity bill or the payroll rises, the business passes those prices on.
- Expectations — If we all believe tomorrow will be more expensive, we buy today and speed up the cycle.
The “termite” effect on your purchasing power
At a “normal” pace of 3%, over ten years you’ll have lost 26% of your buying power.
Translation: €10,000 saved today will be worth €7,400 in real purchasing power by 2035,
without you touching a single cent.
The extreme cases are scarier: Argentina in 1989–1990 recorded 197% monthly inflation.
Imagine your coffee going from €1 to €3 in September and to €10 by December: that’s hyperinflation.
5 shields against inflation (none is a miracle, but they work)
1. CPI-linked deposits or bonds
In Spain there are public bond issues and banking products that adjust the coupon
to the CPI. You won’t get rich, but you don’t lose buying power.
2. Global ETFs + DCA
The MSCI World has beaten inflation in 90% of all 20-year periods.
Investing on a regular basis (dollar cost averaging) smooths out the peaks.
3. Real assets
Real estate, gold, commodities. Their intrinsic value tends to
appreciate when fiat money weakens.
4. Debt management
High inflation means high interest rates. If your mortgage is variable,
renegotiate it to a fixed rate before the Euribor sends your payments soaring.
5. A diversified portfolio with derivatives
Combining quality stocks with futures and options adds versatility:
you can hedge against drops or generate premium by selling covered calls.
I analyze every scenario with
ProRealTime,
the platform that goes with me on every one of my decisions.
Three myths worth burying
- “Inflation is always bad” — Around 2% a year usually points to a healthy economy.
- “The bank protects me” — Most deposits in Spain pay 0%: it’s your money that loses value, not theirs.
- “When my salary goes up I’ll make up for it” — Pay raises arrive late and don’t affect everyone equally.
Conclusion: don’t let the CPI rob you while you sleep
Inflation is that stealthy thief that goes to work every night.
Understanding its causes and arming yourself with the right instruments—from
CPI-linked bonds to diversified portfolios—is the difference between
watching your coffee get pricier every year and keeping your purchasing power rock solid.
