The total shopping basket of the Spaniards is still getting more expensive every month. The price of food and non-alcoholic beverages rose 2.5% in August, which is the lowest increase in three years.
A number of food products were cheaper in the first eight months of 2024 than in the same period in 2023. This applies, among other things, to fresh vegetables (-9%); fresh fish (-2.9%); skimmed (-2.5%) and whole milk (-0.5%); fresh fruit (-1.3%); pasta (-1.1%); and pizza (-0.6%).
In addition to food, mobile phone equipment (-11.7%), liquid fuels (-9.8%), diesel (-9%) and international flights (-8.1%) also became cheaper since August 2023. Although the price of international flights did rise by 6.3% compared to July.
Olive oil
A visible example of the downward trend is the price of olive oil, which has now fallen for four months in a row. And that hasn’t happened since August 2022 (with the exception of another isolated negative figure in January 2023). These monthly decreases have seen olive oil’s annual variation go from an increase of 68.1% in April to 25.1% in August. In 2024, the change in the price of olive oil in 2024 was still 1.9% between January and August.
If the current price of olive oil is compared to that of the same month in 2019, before the pandemic and the energy crisis, it has still more than doubled (an increase of 155%). Olive oil has become the most expensive food of all food packages. In fact, no food is cheaper than it was in 2019. The prices of nuts and dried fruit have risen the least since that time, by 5.1%.
What will the government do about VAT on food?
Food inflation is expected to continue to decline in the coming months and several research centres are already predicting that overall inflation in Spain will be below 3% in 2024. That figure is close to the European Central Bank’s 2% target.
The development of the Consumer Price Index (CPI) for food products depends on whether the government ends the reduction of VAT on olive oil to 0% in October (in force since July). And whether in December it will put an end to the rest of the discounts applied to certain basic products. If VAT on food returns to 21% in January, it will be bad news for Spanish households. And if incomes do not rise at the same rate as prices, Spaniards will lose up to €1,200 in purchasing power due to inflation.