The new inflationary wave continues to gain height in Spain. The Government’s intervention to contain energy prices with tax reductions has managed to stop the escalation of prices, which according to the National Institute of Statistics (INE) closed May growing at a rate of 3.2%, the same cruising speed as in April. End of the problem? Not so fast: tax discounts on electricity and natural gas ended on June 1, and those on fuel expire on June 30. Both factors threaten to cause a rebound effect in inflation in the summer months. Some experts speak of a jump to around 4%, a rate that has not been seen for more than three years.
Returning to May, the month for which the INE has confirmed the leading indicator that was published at the end of the month, the stability has been due to the fact that the rise in fuel prices has been cushioned by the falls in electricity, natural gas and food. In the last month of full implementation, the Executive’s response plan to alleviate the consequences of the war in Iran has become decisive: according to calculations by the Ministry of Economy, inflation would have risen by more than an extra point without that package. That is to say, the 4% level would already be widely exceeded. “Without the fiscal measures, the interannual rate of fuel inflation would be close to double compared to the rate of 15.87% observed in May,” they highlight from the portfolio directed by Carlos Corpo.
The prices of food and non-alcoholic beverages moderated their increase to 2.2%, four tenths below April, thanks to the evolution of fruits, vegetables, legumes and potatoes, news that the Government describes as “direct relief to the household shopping basket.” The data shows that at the moment there is no contagion from the pumps to the supermarkets, as occurred with the conflict in Ukraine, although this type of phenomenon usually takes months, so the risk has not dissipated.
Core inflation (which excludes energy and unprocessed food) stood at 3%, two tenths above the April rate.
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