Inflation follows the evolution towards moderation. In February, the drop in the price of electricity and the stabilization of the price of food explains the reduction of the rate by six tenths to 2.8%. Inflation is placed below the 3% limit for the first time in the last six months. In this way, after the rise in January, when the price was paid for the withdrawal of part of the public anti-inflation measures, in the second month of the year prices have moderated again.
This is good news with an element of concern, the increase in inflationary pressure on services, with the doubt as to whether it is one-off or will set a trend.
With regard to the data published by the INE, the moderation in the price of food is particularly noteworthy, falling by more than two points, to stand at 5.3% year-on-year. It is the lowest rate in two years, since January 2022. The fact is that the price of food remains intact compared to the previous month, but if compared to February 2023, when they reached the maximum level, above 16%, the result is a drop of 2.1 points.
This moderation is noticeable in the decline in the prices of legumes and vegetables and meat, which increased in February 2023; while those of fruit, bread and cereals and mineral water, although they have increased, have increased less than the same month last year. For its part, olive oil remains intractable for another month, and is the product of the INE basket that rises the most, with 67% year-on-year.
A significant fact is that, just as non-processed foods fall, the same does not happen with processed foods, which rise by eight tenths compared to the previous month. “As for non-processed products, the inflationary tension remains”, affirms María Jesús Fernández, from Funcas.
Another key element has been the drop in the price of electricity. Electricity prices have fallen dramatically in February, and this impact has been felt in prices. “Energy and food will become important in the coming months. In January and February we saw the direct impact and during the next few the indirect will appear. How the impact is moving to, for example, sectors with intensive use of energy”, says Miguel Cardoso, chief economist for Spain at BBVA Research.
As for core inflation, which does not take into account energy or food, it moderated only a tenth this month, to 3.5%. It is one tenth above the data that the INE advanced two weeks ago.
One of the reasons for the resistance of the underlying to moderate can be sought in services, with prices that continue to rise. “The most remarkable thing about today’s data are services, which seemed to be moderating, but which point to a reinvigoration of inflationary pressure”, says María Jesús Fernández, from Funcas, who points out that this could be a consequence of the second-round effects on wages and margins or due to a one-off acceleration due to price adjustments that are usually made at the beginning of each year.
