Inflation in Spain has shown signs of moderation in the month of June, with a year-on-year rate of 1.9%, representing a decrease of 1.3 points compared with the previous month.
This figure marks the lowest level since March 2021, mainly due to the behaviour of fuel, electricity and food prices, which experienced an increase of 10.3%, a reduction of 1.7 points compared with May. In this article, we will analyse the key factors that have contributed to this moderation in inflation and its impact on the Spanish economy.
The annual rate of increase in food prices is at its lowest level since April 2022
According to data published by the National Statistics Institute (INE), the fall in fuel and electricity prices has been one of the main drivers of the moderation in inflation in June. In addition, within the food category, a decrease in the prices of pulses and vegetables was observed, while the increase in the prices of fruit, bread, cereals and meat was more moderate. Stable prices for milk, cheese and eggs also contributed to the overall moderation in inflation, in contrast to the increase recorded in the previous year. However, oil and fat prices continued to rise.
The annual rate of increase in food has registered its lowest level since April 2022, but has still experienced double-digit increases over the last 15 months.
In terms of details, sugar has experienced the highest year-on-year price increase, with 44.9%, followed by olive oil with 31%. On the other hand, significant decreases have been observed in passenger transport (-47.7%), electricity (-38.1%) and liquid fuels (-36.6%). Gasoil recorded a 21.6% year-on-year fall, while petrol fell by 16.7%.
Core inflation, which excludes fresh food and energy, also showed a decrease of two tenths of a point, reaching 5.9%.
The Ministry of Economic Affairs appreciates the moderation in the prices of fuel, electricity and food and non-alcoholic beverages. It highlights the effectiveness of the measures adopted, such as tax reductions and subsidies, to achieve these results. Spain becomes the first major economy in the euro area to reduce inflation to below 2% and records the lowest rate in more than two years.
On a monthly basis, the consumer price index (CPI) rose by 0.6% between June and May, with notable increases in domestic (14.7%) and international (6.9%) package holidays, as well as in vehicle insurance (6.5%). On the other hand, decreases were recorded in other oils (-4.4%) and in pulses and vegetables (-4%).
The key, the decline in fuel, electricity and food prices
The moderation in inflation in Spain in June was driven by the fall in fuel, electricity and food prices. These results reflect the effectiveness of the measures implemented by the government, such as tax cuts and subsidies, to control prices. However, it is important to continue to monitor inflation developments closely in the coming months and to assess their impact on the overall economy. Moderating inflation provides some relief to consumers and may have implications for monetary and fiscal policies adopted to stimulate economic growth.