Inflation in Spain rose in March due to end of VAT reduction on electricity

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March inflation

Inflation in Spain rose to 3.2% in March. This is evident from the provisional data of the Consumer Price Index (CPI) published this Wednesday by the National Institute of Statistics (INE).

This increase, by four-tenths compared to February, is largely due to the rising costs of electricity and fuels. This is partly because of the return of VAT to 21% after the normalisation of energy prices after three years.

In contrast, food and non-alcoholic beverage prices moderated in March. These increased less than in the same month last year. The year-on-year price change is again above 3%, after falling below this limit last month. This was after being above this threshold for five consecutive months, since September 2023. In February, inflation fell by six-tenths to 2.8%, due to the fall in electricity and food prices. August maintains the lowest level of the past year, at 2.6%.

Inflation March 2023 compared to March 2022

Compared to March 2023, inflation will increase by a tenth. However, in March 2022, the indicator shot up to 9.8%, the highest level in 37 years. This was due to the impact of the war in Ukraine that had started the previous month.

Core inflation falls to 3.3%

Core inflation excludes unprocessed food and energy prices. This drops again by two-tenths and amounts to 3.3%, the lowest figure in the past two years.

Cogesa Expats

“Importantly, core inflation is in line with the rest of our country’s data,” said First Vice President and Finance Minister María Jesús Montero on RNE’s Las Mañanas. “This shows that the economic policies we are implementing are successful.”

Monthly price change

In terms of monthly price change, consumer prices registered an increase of 0.8% in March compared to February, according to the preliminary CPI data.

Finally, the Harmonized Index of Consumer Prices (HICP, which allows international comparisons) records an annual inflation rate of 3.2%. That is three tenths higher than in February, and a monthly change of 1.3%.

These data are provisional, so we will have to wait a few weeks for the final figures, the INE reminds us.

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