Core inflation climbed to 7.5% in Spain, making it the highest figure since December 1986, the national statistics institute INE revealed Monday after VAT was reduced on some foodstuffs and some state subsidies on fuel were removed.
The rise in inflation recorded by INE excludes unprocessed foods and energy products and is mainly explained by the increase in fuel prices, higher than in January 2022, and the fact that the fall in the prices of clothing and footwear was less than last year.
According to the same study, the monthly increase in prices also reached 7.5% in January following the five months of moderate increase after the 10.8% peak reached in July which was mainly due to energy price hikes linked to the war in Ukraine.
In annual terms, however, consumer prices fell by 0.3 % compared to December, the study added.
The harmonised index of consumer prices (HICP), the estimated annual rate of change was also 5.8%, three-tenths of a percentage point higher than that recorded the previous month.
Still, the drop in electricity prices, greater than in January 2022, is something INE pointed out – a trend that can, in part, be explained by the so-called “ Iberian derogation” which gives Spanish and Portuguese consumers temporary protection from skyrocketing electricity bills.
These predictions come as the government, which expects core inflation to peak in the first quarter and “follow the downward path of headline inflation and energy and other commodity costs,” recently adopted a series of measures.
While the mandatory 20 cent discount per litre of fuel – petrol and diesel – ended for all Spanish consumers on 31 December and now only applies to road hauliers, on 1 January, the government scrapped VAT on staple foods and halved from 10% to 5% for oils and pasta h.
Municipal elections will be held in May in Spain – a vote many view as the first litmus test for socialist Prime Minister Pedro Sanchez’s governing coalition with left-wing Unidas Podemos.
General elections will be held in December when Spain is in the final month of its EU Council presidency, starting on 1 July for six months.
(Fernando Heller | EuroEFE.EURACTIV.es)
Source: euractiv.com
