Inflation eased to 6.8% year-on-year in November, thanks to the fall in electricity prices. This is according to consumer price index (CPI) data released by Spain’s National Institute of Statistics (INE) on Wednesday.
The fall of the energy prices worked its way into food prices. While these are cheaper in Spain compared to the previous month, they still rose by 15.3% year-on-year. The now final figure for November validates the forecast the INE had published at the end of last month. It is lowest figure since the 6.1% in January, before the start of the war in Ukraine. Inflation has now fallen for four months in a row since peaking at 10.8% in July, the highest figure in the historical series. On a monthly basis, the CPI recorded a decline of a tenth of a percentage point in November from the previous month. Compared to October, there was an increase of three-tenths of a percentage point.
Inflation curve reversed
‘This is a positive figure because it indicates that we are bucking the inflation curve,’ Prime Minister Sánchez said, speaking at the European Union summit. According to INE data, the reason for this decline is due to the fall in fuel, electricity and heating oil prices. For instance, the price of electricity fell by 22.4% compared to the previous year, while the price of gas rose by 10.6%.
Spain’s finance minister, María Jesús Montero, seized on the figures to highlight government policies. ‘The economic policies of this government are having the desired effect of easing the international situation for families in our country and for small and medium-sized enterprises,’ she said at the meeting in the Congress of Deputies. Montero defended what she called the ‘most important’ tax cut ever by a government for the middle and working classes.
Increase in contributory pensions
The November CPI confirms an 8.46% rise in contributory pensions and the subsistence minimum for next year. This is because the revaluation is calculated based on the average inflation rate recorded between the months of December and November. This increase represents a €12.75-15.3 billion increase in pension costs for the public purse, according to estimates by the independent Fiscal Responsibility Authority (Airef) and the Bank of Spain.
Food prices continue to rise
Despite moderating inflation, food prices rose 15.3% in November. This is the second highest figure in the historical series, after October’s 15.8%. Thus, while the consumer price index (CPI) for food fell for the first time in 13 months, the increase remains “staggering”.
The food item that has risen the most in price over the past year is sugar, with a 50.2% increase, followed by oil, milk and eggs, with price increases of almost 30%.
The price of olive oil increased by 25.9%, while other types of oil rose by 55.9%. Butter is 37.5% more expensive, as are flour and cereals.
Fall in electricity and fuel prices
‘Electricity and fuel prices have fallen, but the shopping basket is much more expensive than a year ago,’ said Sara García, secretary for union action and employment at the USO union, adding that ‘most wages in Spain have suffered a 13-point loss in purchasing power over the past two years’. CCOO trade union general secretary Unai Sordo warned that almost half of the products in the shopping basket measured by the INE have increased by more than 7% and urged intervention in several markets, not just the food market, to ‘capped’ the prices of ‘important’ products for citizens.
Core inflation rises
Core inflation, excluding unprocessed food and energy products, rose by a tenth of a percentage point to 6.3% in November, half a point lower than the overall CPI figure and only a tenth point lower than the peak recorded in August.
By autonomous region, the annual CPI fell across the country. The steepest falls occurred in the Balearic Islands and Navarre, with declines of one and 0.8% respectively. This was followed by the Canary Islands, Galicia, Extremadura and Castile and Leon with 0.3%.