For the first time in a year and a half, core inflation has been below general inflation. The progressive and regular downward trend in the underlying inflation rate, which moderated four tenths in April to 2.9%, is combined with an always more volatile general inflation, which on this occasion rises one tenth to 3.3 %.
The final data published by the INE this morning confirms the anticipated figure it provided two weeks ago.
Those responsible for this rise of one tenth are the prices of food and gas, while electricity moderated, but less than in April 2023.
Specifically, food rose 4.7% in April, which is four tenths more than the previous month. In this way, the downward trend in food prices is interrupted, which began the year with 7.4% and then added, in February and March, two considerable decreases, to now rise by the aforementioned four tenths.
Olive oil remains intractable, once again the product that has increased the most in price, 68.1%. If you go back a little further, the rise is even more spectacular. From January 2021 to last month, olive oil has increased by 204.8%. This past April, among foodstuffs, the increases in the prices of fruit juices and vegetables (17.3%), and fruits (17.2%) also stand out.
“Food is a very volatile market, still surrounded by a lot of uncertainty. Given the fall in fertilizer prices and the better weather, it is most likely that they will be reduced in the second part of the year,” says Miguel Cardoso, from BBVA Research.
Regarding gas, it has risen this year when it fell in the same month of the previous year and electricity moderated, but less than in April 2023. In both electricity and gas there is an impact of the return of VAT at 21%. From Funcas, they calculate that the increase of one tenth in general inflation in April is determined by this normalization of VAT on gas. “When the VAT was lowered it allowed inflation to moderate, now, when it returns to normal, it rises although it does not mean that there is an increase in inflationary tensions,” says María Jesús Fernández, from Funcas.
The positive data is underlying inflation, which does not account for energy or fresh food, and which is therefore much more indicative of background currents, has been reduced by 4 tenths, to 2.9%. Economists highlight the good performance of services, which do not register a significant increase. “It is reassuring that there is no reinforcement of inflationary pressures in services, as had occurred in previous months,” indicates María Jesús Fernández, from Funcas. “We are not seeing a significant increase in service prices and this is good news. It is not falling but it is not accelerating, when a good part of the economic recovery comes from the services sector,” says Miguel Cardoso, from BBVA Research.
The Ministry of Economy highlights that this gradual moderation of inflation translates into an improvement in the purchasing power of families, who have already recovered their pre-pandemic purchasing power, with growth higher than that of Spain’s main partners. They also consider these data indicate “the capacity of the Spanish economy to make the greatest economic growth among the main countries in the euro zone compatible with a moderation of prices and the maintenance of support for the most vulnerable.”
