The forecasts have come true and inflation for June has moderated to 1.9%, a drop of 1.3 points compared to the previous month and the lowest rate for more than two years, since March 2021. It means being below 2%, which is the reference figure of the European Central Bank (ECB).
Since that April 2021, we have suffered an escalation in inflation, first due to the resumption of activity after the pandemic and then its maximum accentuation as a result of the war in Ukraine, reaching its peak last summer and since then starting the current moderation, finally reaching 1.9%.
The causes of this fall are the moderation in the prices of fuel, electricity and food prices, since they rose less than in June of last year. In this brake on prices, the statistical effect also has a large part of the influence, since the interannual data is compared with the inflation rate of June last year, when it was at very high levels.
From the Ministry of Economy they emphasize that Spain is the first country of the large economies of the euro zone that manages to reduce inflation below 2%, and that in this way it remains one of the large countries with the lowest inflation in the European Union, with a gain in competitiveness and market share for Spanish companies.
In this way, the trend towards moderation in inflation is confirmed, which is expected to continue throughout the summer. Let us remember that between June and August of last year, inflation remained above 10%, which now, due to the base effect, will help to achieve lower rates. However, the forecast is for there to be a rebound from September, so that average inflation for the year could be around 4%.
For its part, core inflation, which does not include energy or fresh food, stood at 5.9% year-on-year, a reduction of two tenths compared to May and which is the lowest rate in a year, an underlying rate that Despite moderating, it does so at a very slow pace, and it had been above 6% for almost a year, a barrier that has now finally fallen below. It is well known that this inflation, which better represents underlying trends and has a much lower degree of volatility, only moves, currently downwards, very gradually.
This week the Council of Ministers approved the extension of many of the measures adopted to combat inflation, such as the reduction or suppression of VAT on basic foods. It is an extension until the end of the year, although subject to high levels of inflation. Specifically, it will remain if core inflation does not fall below 5.5%, that is, four tenths less than that registered this month of June.
The Government did not wait for today’s data to be published to prolong the measures because many of them expired today, and they also already had a clear trend. It is a scenario of a clear slowdown in inflation, but with food prices that remain very high. A behavior of food prices that especially punishes the pockets of the most vulnerable and which is what, to a large extent, has forced the Executive to assume this new extension in the seventh package of anti-inflation measures, in which they are also incorporated the continuation of aid for public transport, as well as some new ones, such as tax incentives for the purchase of electric cars.
