Spain closes the first month of 2023 with a slight increase in inflation to 5.8% in January. The scrapping of VAT on primary foodstuffs does not compensate for the end of the fuel discount that was a benefit until the end of 2022.
The inflation rate of 5.8% is 0.1% higher than in December 2022. However, it is still the lowest rate since November 2021. The National Institute of Statistics (INE) of Spain already draws this conclusion towards the end of the first month of the year.
End of fuel discount immediately felt
It was in July 2022 when inflation in Spain reached a record high of 10.8%. Since the summer of 2022, there has only been a fall in inflation. But this trend has now been broken in January. According to the INE, the slight increase in inflation is due to fuel prices haven risen again over the past month.
This increase is related to the end of the fuel subsidy. All road users in Spain were able to make use of this from April to December 2022. For most drivers now, there is no other option than to pay the full price for fuel again. And that is rising considerably since refueling now costs an average of 17% more than a year ago.
Small effect of scrapping VAT on primary messages
However, January was the first full month where VAT has been removed from many primary products in supermarkets. This was one of the measures taken by the Spanish government to accommodate people in these expensive times. Inflation in consumer prices in supermarkets and shops fell by 0.3% in January compared to a month ago.
In other areas, when food and energy prices are excluded, core inflation in Spain rose by half a percent. When all components are included in the determination of inflation, the bottom line is an average increase of 0.1% for January in Spain.