Inflation in Spain increased to 3.5% in September compared to the same month a year ago, according to reports from statistics agency INE. This means that inflation has increased by almost 1% compared to a month ago.
After a temporary decline to 1.9% in June, which was lower than the European Central Bank’s target of 2%, the consumer price index (IPC) has now been on the rise for three months in a row. The current increase may be a signal that the IPC will continue to rise in the coming months as fuel in particular becomes increasingly expensive.
Core inflation
However, if we look at the so-called core inflation, which is the increase in the price index that does not take into account the costs of food, fuel and energy, there is actually a decrease of 0.3% compared to a year ago and it amounts to 5.8%. This is the lowest percentage since June 2022. This means that there is a visible downward trend in core inflation that is likely to continue. Furthermore, this is an important signal because core inflation provides a more stable picture than the IPC.
Fuel and electricity have a major influence on IPC
However, the price index including food, fuel and energy in September is the highest since April this year when it was still 4.1% in Spain. The INE has not yet classified the increased IPC by product group (the INE will publish details on October 13), but it is clear that the higher electricity price compared to a year ago and also, albeit to a lesser extent, the aforementioned increased fuel price, have a major influence.
Government remains positive
Experts predict that the IPC will continue to rise at least until the end of the year as energy inflation is expected to rise. The Fundación de las Cajas de Ahorras (Funcas) predicts that inflation will rise to 4.9% in December, with a significant increase in October. Despite this development, the Ministry of Economy and Digital Transformation emphasised on Thursday that Spain has been among the Eurozone countries with the lowest inflation and the greatest economic growth for more than a year.
Minister Nadia Calviño of the aforementioned ministry also announced that this government’s economic policy “stimulates the competitive position of Spanish companies, helps increase their market share and works to increase purchasing power and salaries.”
Also read: Bank of Spain warns of higher than expected inflation in 2023 and 2024
