In June, the Spanish economy managed to avoid the feared rise in prices derived from the end of energy aid with the help of an unexpected ally on the international board. According to provisional data published this Monday by the National Institute of Statistics (INE), the Consumer Price Index (CPI) remained at 3.2% in June, repeating for the third consecutive month the same rate recorded in April and May.
The evolution of inflation is explained by the collision of two events of opposite sign. On the one hand, the increase in energy prices derived from the withdrawal of some tax cuts on June 1 and, on the other, the sharp falls in the price of oil as a consequence of the latent .
The main bullish driver this month has been the electricity and gas bill, which has absorbed . The VAT applicable to electricity, natural gas and other fuels such as pellets has returned to the ordinary rate of 21%, leaving behind the reduced 10% that was applied until May because that is how the Government’s anti-crisis plan had been designed, which estimates that its aid program has reduced inflation by approximately one point. Added to this normalization is the recovery of the Special Tax on Electricity, which has gone from 0.5% to its usual level of 5.11%. According to sector estimates, this translates into an average increase of about 10 euros per month in the electricity bill for a home on the free market with a fixed rate, while in the regulated market (PVPC) the increase is around 15%.
Faced with the pressure of domestic receipts, the fuel market, where aid is maintained, has acted as a counterweight to prevent a greater rise in inflation. The price of a barrel of Brent, a reference in Europe, has returned this month to the levels prior to the start of the war in the Middle East. This correction is a great relief compared to the peaks of $120 that have been reached as a result of the closure of the Strait of Hormuz. Analysts insist that the drop in crude oil is tangibly reducing global inflationary pressures, which in the Spanish case translates into a decrease in prices at gas stations that partially offsets the rise in electricity and gas prices.
In the absence of the INE publishing the final data in the coming weeks, the Complutense Institute of Economic Analysis (ICAE) estimates that the annual rate in the energy sector will hardly vary with respect to the previous month. This stability responds to the fact that electricity has experienced a month-on-month jump of 16.7%, driven almost entirely by the end of tax credits. But this increase in price is offset by a notable drop in the price of fuel, with a decrease of 7.6%.
Angel Talavera, chief European economist at Oxford Economics, explains that June has been characterized by these “opposed dynamics.” But despite the oil truce, price stability remains subject to extreme geopolitical volatility. Incidents such as unknown boats off the coast of Oman or the intermittent closures of the Strait of Hormuz have caused specific spikes in crude oil that prevent the energy crisis from being closed.
In this sense, international organizations have warned that any new interruption in maritime supply routes would once again increase transport and energy costs, which would force all inflation forecasts to be revised upwards for the second half of the year.
