Inflation in Spain has shown signs of moderation, with the Consumer Price Index (CPI) dropping to 2.8% in July, a decrease of 0.5% compared to June. This marks the lowest inflation level since February, according to the latest data released by the National Institute of Statistics (INE).
The reduction in inflation is largely attributed to a decrease in food and electricity prices.
Food prices see a significant slowdown
Food prices, which have been a significant driver of inflation, also saw a notable reduction, dropping by 1.1 points to a 3.1% increase in July. This slowdown is primarily due to the decrease in prices for fruits, oils, and fats, which contrasts with the price increases observed during the same period last year. The recent elimination of VAT on olive oil, effective from July 1st, has also contributed to this downward trend.
The Ministry of Economy highlighted that July’s food inflation rate is the lowest since October 2021, reflecting the ongoing efforts to balance economic growth with price moderation.
Core inflation and consumer price index harmonised
Core inflation, which excludes unprocessed food and energy products, also eased slightly, falling by 0.2 points to 2.8%, its lowest rate since January 2022. Additionally, the Harmonised Consumer Price Index (IPCA) dropped to 2.9% on an annual basis, a decrease of 0.7% from June.
Sectoral price changes: Transport and leisure costs rise
Despite the overall moderation in inflation, certain sectors have experienced significant price increases. Passenger transport by sea saw a 30.9% rise compared to July 2023, while jewelry prices increased by 12.7%, and domestic flights went up by 11.7%. In contrast, prices for mobile phone equipment fell by 10.5%, and natural gas prices dropped by 7.9%.
In July, consumer prices saw a 0.5% monthly decrease, with the most significant reductions observed in clothing and footwear, primarily due to summer sales. However, leisure and culture prices rose, driven by higher costs for tourist packages, which increased by 12.2%.
Regional variations in inflation
Six autonomous communities recorded inflation rates above the national average in July. Galicia led with 3.1%, followed by Asturias, the Balearic Islands, the Canary Islands, Catalonia, and the Basque Country, all with rates of 2.9%. The lowest inflation rates were observed in Castilla y León and Cantabria, both at 2.5%.