Inflation in Spain below 2 percent for the first time since early 2021

by Lorraine Williamson
inflation below 2%

Inflation reached its lowest level in more than two years in June. The consumer price index (CPI) even fell below 2% this month. Prices for fuel, electricity and foodstuffs rose less than last year. 

Compared to June 2022, the consumer price index (CPI) will be 1.3% lower and will be set at 1.9% for June 2023, the lowest level since March 2021. So there is a significant slowdown in price increases. This decrease is due to the fact that prices for fuel, electricity and food rose less quickly than in June last year. 

Underlying inflation 

The other side of the coin is that core inflation (the index excluding unprocessed food and energy products) still stood at 5.9% in June, only 0.2% lower than in May 2023. This is the index where consumers notice the most. Nevertheless, the lowest inflation in more than two years does not mean that the Spaniards have more purchasing power and wages are in prospect. 

Spain is the first major eurozone economy with inflation below 2%

Inflation has been falling for two months in a row, according to data from the National Institute of Statistics (INE) in Spain. With this 1.9%, Spain is “the first major economy in the eurozone where inflation has fallen below 2% (the ECB’s reference level),” the Ministry of Economic Affairs and Digital Transformation said on Thursday. 

Spain thus remains one of the countries with the lowest inflation in the European Union. The Ministry, led by Nadia Calviño, stressed that the government’s measures have proved effective in reducing inflation by almost 9% in less than a year. The Ministry is convinced that reducing taxes and subsidies are successful measures to combat high inflation. 

The government announced earlier this week that it would extend the VAT reduction on basic products in the supermarket. This measure was supposed to expire on Friday, but will remain in force until at least the end of this year. 

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