MADRID – The estimated annual inflation rate of the Consumer Price Index (CPI) in August 2021 is 3.3%. It is the highest level since October 2012. This is shown by a leading indicator prepared by the national statistics agency INE.
If confirmed, this inflation represents a four-tenths increase in the annual rate, as this variation was 2.9% in July. With the data from August, it will be the eighth consecutive increase in the CPI. Therefore, it will remain at the highest level since October 2012.
According to INE, the annual behaviour of the CPI stands out as the rise in electricity prices, higher this month than in August last year and with several historic highs in the wholesale market. Likewise, the price level has also made the electricity bill more expensive.
Only after 14 September will INE publish the evolution of all price components. However, other energy products also increase the costs for the consumer. The price of natural gas is five times more expensive than last year. Fuels have also risen sharply compared to a year ago.
The increase in commodities due to the economic reopening after the impact of the pandemic is spreading to all kinds of products and services. This evolution exceeds forecasts for the global economy and for the Spanish economy. The Spanish Bank and the European Commission expected a CPI of about 2% for 2021. However, the ECB does expect the upward pressure on prices in 2021 to be temporary and limited.
On a monthly basis, the CPI is returning to positive rates, rising 0.4% in August, after falling 0.8% in July after four consecutive months of gains.
Core inflation estimate
The INE is including an estimate of core inflation (excluding unprocessed foods or energy products) in the progress of the CPI data, which rose by one-tenth in August to 0.7% and is more than two and a half points lower than the general CPI. This subindex is often closely monitored by economists because it often marks the long-term trend in prices and is not subject to so much volatility. The underlying index is also taking off and is already at its highest level of 2020.
In the eighth month of 2021, the Harmonised Index of Consumer Prices (HICP) – a European price index developed to compare the inflation rates of the Member States of the European Union – placed its annualised interest rate at 3.3%. That is four-tenths more than the month before. On a monthly basis, the HICP rose by 0.4%.