The Bank of Spain lowers the effectiveness of the gas cap mechanism that will be released next Wednesday and that cost so much to start in Brussels. According to his calculations, it will allow the average inflation to be reduced by 0.5 points this year, that is, it practically leaves it at half of the calculations of the Minister of Ecological Transition, who on Thursday estimated the reduction at between eight tenths and one point.
In the macroeconomic projections presented yesterday, the Bank of Spain calculates that the Iberian mechanism will reduce the price in the wholesale electricity market by 30%, which will mean a 17% drop in the regulated bill (PVPC). Transferred to the CPI, it would make it possible to reduce this year’s inflation by between 4 and 7 tenths, depending on the scenarios considered, although the base scenario places the reduction at five tenths.
Precisely, the impact of this mechanism is what leads the Bank of Spain to slightly lower its inflation forecast for 2022. It reduces it two tenths to leave it at 7.2%. For the following two years, it places it at 2.6% in 2023 and 1.8% in 2024. Prices that continue to surprise on the rise, and that show rises in food and in the underlying component, which shows how the original cause of inflation, such as energy, has already been transferred to the entire shopping basket.
In any case, in the coming quarters a moderation of the current high inflation rates is expected, according to the prices in the commodity futures markets and the expected gradual correction of the bottlenecks.
With regard to economic activity, the good second quarter of the year corrected the slowdown that led to the first, although not completely. In this way, the Bank of Spain has revised growth down four tenths this year, to set it at 4.1% and sets the recovery of the pre-pandemic GDP level for the third quarter of 2023. For the next two years, It practically maintains the April forecast, with 2.8% in 2023 and 2.6% in 2024.
In this second quarter, the lifting of restrictions due to the pandemic, which drives the most affected sectors such as hospitality and transport, and the increase in consumption helped by fiscal measures, play in favor of growth.
