Else Beekman
The cost of living in Spain increased by 2.8% in July compared to the same period last year, according to the latest estimates from the National Statistics Institute (INE). This preliminary data suggests that the Consumer Price Index (CPI) has fallen below 3% for the first time in 2024, marking a significant slowdown in inflation.
After a downward trend began in June following three consecutive months of increases, inflation has eased by 0.6 percentage points. The current 2.8% inflation rate is the lowest recorded this year, matching the level seen in February.
Month-on-month, prices have decreased by 0.5% from June to July, marking the first reduction this year and the largest drop since January 2023. The last comparable decrease occurred in September 2022.
The INE attributes this positive development to several factors: a significant drop in electricity prices, a reduction in food prices (which were notably high in July last year), and a slower increase in leisure and cultural expenses compared to July 2023.
Core inflation, which excludes volatile items such as food and energy, also fell by 0.2 percentage points to 2.8%.
Increase in private consumption
Carlos Cuerpo, Minister of Economy, Trade and Enterprise, welcomed these figures, highlighting the strong dynamism of the Spanish economy. The positive trend is partly due to a 2.3% increase in private consumption over the past year, a growth rate expected to continue as inflation stabilises.
If the July inflation rate of 2.8% is confirmed and continues into August, it would move closer to the 2% rate considered acceptable from a macroeconomic perspective. However, it’s important to note that this moderation in the rate of price increases does not imply that prices are falling. The CPI figure for July 2024 is compared to July 2023, when prices rose by 2.3%, which in turn followed a 10.8% increase in July 2022. This cumulative effect means that the cost of living is now approximately 15% higher than three years ago.
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