Prices in January have risen by two tenths, leaving the interannual rate at 5.9%. It is a slight rebound that comes at the moment when the general rebate on fuel has been withdrawn. In this way, inflation reached its highest point in July, close to 11%, and then gradually moderated until December. Now, in January, there has been this increase of two tenths. It is one tenth more than what the advanced data from the INE pointed out. If this rise has been limited, it is thanks to the drop in the price of electricity
On the other hand, food inflation fell by three tenths in the interannual rate in January, remaining at 15.4%. This slight brake has been achieved thanks to the reduction in VAT on basic foods, but its effect has been moderate, and has been offset by the increase in the price of other foods that did not benefit from this reduction. Let us remember that food had reached very high levels, when in December it reached an increase of 15.7%. In this field, it is perceived that the basket affected by the VAT reduction decreases, while the rest continues to increase.
Monthly, that is, in relation to December, the prices of essential foodstuffs affected by the VAT reduction fell by 1.6% in January, well below the VAT reduction, which was 4%; while the rest of the shopping basket increased by 1.4%. Specifically, the price drops on the vast majority of discounted items, more on oils and fruit, and very little on cheese and bread.
Let us remember that as of January 1 there have been two significant changes in the fiscal measures adopted by the Government and that act in the opposite direction. On the one hand, the one with the greatest impact is the withdrawal of the aid of 20 cents per liter of fuel, which played a role in containing prices, but which meant a significant hole in the fiscal coffers and which was criticized for its nature. generalist. And on the other hand, the VAT reduction on essential foods, which has raised a discussion about its effectiveness with claims from consumer associations that the prices of some of these products have not fallen.
The bad news comes hand in hand with core inflation, which does not take energy or fresh food into account, and which, as the advance data pointed out, rises half a point, to stand at 7.5%. It is the highest since December 1986. It is an inflation that takes longer to rise, but also longer to fall and that will foreseeably be with us for a few more months.
From the Ministry of Economy, they indicate that “the set of measures adopted last December are taking effect in their first month of application and will continue to contribute to the decline in inflation in the coming months.” They also expect core inflation to reflect the decline in headline inflation and energy and other raw material costs in the coming months.
