Prices have been falling for four consecutive months since they touched 11% in July. With the 6.8% in November known today, it is confirmed that inflation has entered a moderation phase, and even this moderation is taking place at a faster rate than the experts expected. In any case, it is true that this percentage continues to be very high, and it will take time to return to levels considered normal. This represents a reduction of half a point compared to the interannual rate of the previous month, when it stood at 7.3%.
It is the prices of electricity and gasoline that have pushed prices down, and also, although to a lesser extent, that the increase in prices for the new season of clothing and footwear has been more moderate than in 2021. It must be taken into account that this reduction in inflation is partly due to the so-called base effect. It is the statistical effect that is produced when comparing the current inflation data with that of the corresponding month of the previous year, when they were already high. In this way, the interannual variation moderates.
Looking at the evolution of the last few months, it can be seen that it has gone from 10.8% in summer to 6.8%. November, according to the data provided by the INE this morning. This represents the lowest annual inflation since January of this year. “The trend towards moderation that began this summer continues,” they say from the Ministry of Economy.
“The data for November confirm the moderation in energy prices that has been observed since the summer highs,” says Raymond Torres, from Funcas. One of the reasons for this moderation is that the demand for hydrocarbons has fallen as a result of the global economic slowdown, as well as in the case of gas, because there are already enough reserves to face the winter. To this, the Iberian mechanism is also added, which has made it possible to lower the electricity bill. However, the news is not so positive on non-energy prices. “They continue to advance at a high rate, because they are still incorporating the increase in the cost of fuel, electricity and transport from previous months, especially in the case of food,” adds Raymond Torres.
“We expected the change in trend in inflationary pressure to consolidate and it has been confirmed, it is very good news,” says Oriol Aspachs, from CaixaBank Research, adding that the correction is even faster than expected.
On the other hand, core inflation, which does not take into account energy or fresh food, has risen slightly, one tenth, standing at 6.3%. This inflation, considered less volatile than the general CPI, has been above 6% since July, and just as it took longer to increase than the general index – in January it was at 2.4% – now, it will also take longer in descend. Its high levels show the full transfer of high energy prices to other products and probably indicates that food prices continue to grow. Remember that in October they became more expensive by 15%. The details on November will arrive when the INE publishes its final data.
If the definitive inflation data confirms the figure advanced today, it will mean that pensions will increase by 8.46% next year. The current legislation, already applied last year, provides for increasing pensions according to average inflation from December of last year to November of this year. In this way, pensioners ensure that they maintain their purchasing power, even if it is at the cost of a sharp increase in public spending.
Looking back at 2022, it can be seen how the year started with already high inflation, 6.1% in January, to later pay dearly for the start of the war in Ukraine, which triggered prices to close to 10% in March and already in July peaked in July. Since then, the CPI has moderated, but it is and will continue to be a gradual process.
That is why the Bank of Spain places average inflation for 2023 at 5.6%. In any case, it is becoming noticeable that the reduction in the price of raw materials and the better functioning of the supply chains make it possible to ensure the moderation of prices.
