Inflation in Spain in July highest in 40 years

by Lorraine Williamson

MADRID – Prices in Spain rose by 10.8% in July. That was confirmed on Friday morning by the statistics agency INE. It is the worst figure in nearly four decades due to increases in food, electricity and clothing. 

The monthly increase of just over six-tenths is essentially due to the rise in the prices of food and non-alcoholic drinks and electricity, as well as the cost of clothing and footwear, the prices of which have fallen less than last year. Inflation does not reflect the relief from lower fuel prices. 

The culprits of inflation 

Among the categories where prices rose the most in July, housing stands out, varying from four points to 23%. This is because electricity prices have increased this month compared to the decrease registered in July 2021. 

On the other hand, in clothing and footwear, the annual variation is 5%, more than two and a half points higher than that in June, because the fall in prices this month is less than in July last year. 

As has been the case in recent months, food and non-alcoholic drinks climbed to 13.5%, six-tenths higher than last month and the highest since the start of the series, in January 1994. 

The price increases of meat and milk, cheese and eggs stand out compared to the stability of the previous year, bread and cereals, higher this month than in 2021, and legumes and vegetables, which fell in July last year. 

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Fuel drop 

In a more in-depth monthly price comparison, the categories that have become more expensive between June and July are tourist packages (13%), electricity (6.4%), and gas (5.3%). Food concerns milk, cheese and eggs (1.6%). 

Transport prices were three points lower than last month at 16.2%. This was caused by the drop in fuel and lubricant prices compared to the increase recorded in July last year. 

Underlying inflation 

Core inflation (excluding unprocessed foods and energy products) rose six-tenths to 6.1% in July, the highest value since January 1993. In the seventh month of 2022, the Harmonised Consumption Price Index (IPCA) set its annual rate of 10.7%, seven-tenths above the June data. The monthly variation of the IPCA showed a decline of 0.6%, data from the INE shows. 

Government “concerned” 

The government has responded to this highest CPI since 1984, showing its “concern”. Minister Maroto of Industry, Tourism and Trade, in statements to Antena 3, recalled the recently approved measures and shock plans “to absorb inflation and that there is no loss of purchasing power for households and companies.” “Had we not taken the measures, the IPC would have risen by 3.5% more,” he assured. 

Inflation due to geopolitical tensions 

Maroto said he is confident that inflation will recede in the coming months, pointing out that it is a global phenomenon and one of the main effects of geopolitical tensions. These lead to a continuous increase in energy prices, especially for gas, and also for food. 

Also read: Inflation in Spain up to almost 11%

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