MADRID – Inflation resumes its upward trend this month after moderating in April. The consumer price index (CPI) rose four-tenths to 8.7% year-on-year and rose 0.8% in May from April as fuel and foodstuff continue to rise.
This is evident from data from the main inflation indicator published on Monday by the Spanish Institute of Statistics INE. Inflation in May was therefore still 1.1 points below the March high. This was when the CPI reached 9.8%, the highest percentage in almost 37 years.
This new year-on-year and month-on-month increase in May is mainly due to increases in fuel prices and the shopping cart. However, electricity prices have fallen compared to the rebound seen in the same month of last year was recorded.
Core inflation at the highest level since October 1995
Core inflation, which excludes the most volatile evolution of food and energy, rose to 4.9%, the highest level since October 1995, almost four points below the overall CPI. The annual percentage rate of the Harmonized CPI Flash Indicator (IPCA) is 8.5%.
Measures to curb price increases are working
Sources from the Ministry of Economic Affairs pointed out that the measures in response to the consequences of the war “clearly limit the price increase”. In addition, they emphasize that the entry into force of the restriction on electricity prices on the wholesale market is “an additional insurance against possible price increases of energy in international markets”.
Only inflation slows down in the second half of the year
The government continues to forecast that “inflation will gradually slow down in the second half of the year”. However, it will continue to “fluctuate during the summer months, based on possible base effects and taking into account the high level of uncertainty posed by the global economic context”.
New record petrol price in Spain
Last week, the average price of petrol in Spain reached a new record, at €1.94 per litre. Some places are even charging more than €2.05 per litre. Those are unprecedented numbers in the fifth consecutive rise after Easter. The price of diesel, despite a 1.06% drop to €1.867 per litre, remained higher than the European Union average (€1.856).
The bonus of 20 cents per litre
Compared to a year ago, the average price of a litre of petrol has become 43.7% more expensive, while in the case of diesel it is 54.3% more expensive. This increase does not include the current bonus, according to data from the European Union’s oil bulletin.
The prices paid by the consumer are not these maximums when applying the mandatory discount of 20 cents per litre approved by the government on April 1, leaving the average price of petrol last week at €1.74 per litre. Still, the rise in fuel prices in recent weeks has ‘eaten’ much of that bonus.