Despite the traditional increase in prices in December of the most consumed products at Christmas time, inflation has continued to moderate, standing at 3.1%, one tenth less than in November, according to data released this Friday by the National Institute of Statistics (INE). ). The evolution is due to the behavior of food and electricity prices, which rose to a lesser extent than in the same period of the previous year.
For their part, fuels have pushed prices up this last month, since, although they have become cheaper, they have done so with less intensity than in December 2022, as highlighted by the INE. On the other hand, if the monthly rate of prices is analyzed, they remained flat in December, that is, they neither decreased nor increased compared to the month of November.
Core inflation, which does not take into account energy or fresh food, also slows down significantly, falling seven tenths compared to November, to 3.8%. The data confirms the progressive deceleration of this rate, which is the lowest since last March and marks the underlying trend of prices.
With the moderation of its interannual rate in December, inflation registers its second consecutive month of declines and falls to its lowest level since last August, when it was 2.6%. Likewise, if the data is confirmed in the middle of next January, inflation will close the year well below how it ended in 2022, when the CPI stood at 5.7%, and in 2021, a year that ended at 6. ,5%.
The Government attributes the containment of inflation to the measures it has adopted to avoid the loss of purchasing power of the population, such as the reduction in VAT on food, which will be extended until next June, or discounts on transport public, which will continue throughout next year.
Despite this, the exorbitant increase in food prices since the end of 2021 has put domestic economies on the ropes. A trend that has been softening over the last year. Thus, if in January the Consumer Price Index (CPI) for food was 15.5%, last month it had dropped to 9%. The December data will be known in mid-January.
The economic analyst and professor at EAE Business School, Juan Carlos Higueras, indicates that the strong rise that official interest rates have experienced since July 2022 is being transferred to prices. “We’re starting to see results,” he says. However, he explains that the tightening of monetary policy has not resulted in an abrupt slowdown in consumption, but rather in the moderation of household spending, which must face the increase in mortgage payments, so “no longer “It is consumed with the same joy as it was two years ago.”
Despite this, the professor of Economics at the University of Barcelona (UB), Joan Tugores, considers that the latest data leaves room to be “a little more optimistic”, thanks above all to two factors: the first, the fact that “the Gaza conflict has not caused an increase in the price of oil, unlike other historical episodes in the Middle East”; and the second, that the ECB’s policies “have helped contain inflationary expectations and underlying inflation.” Added to this is the fact that the measures adopted to protect the most vulnerable from inflation “have worked” during 2023, as they may also do next year.
Finally, it points out that there is “a soft landing” of inflation to return to “more normal” levels, around 2% or 2.5%, after the upward path that began at the end of 2021. So, has the time come to relax anti-inflationary measures? “It would be too soon. History shows that episodes of inflation have often reappeared when the battle has been prematurely declared won,” responds Tugores.