Inflation Rises to 3% in January 2025 Amid Fuel and Electricity Price Hikes
The Consumer Price Index (CPI) saw an increase of 0.2% in January 2025 compared to the previous month, bringing the year-on-year inflation rate to 3%. This marks the highest inflation rate since June 2024 when it stood at 3.4%, as reported by the National Institute of Statistics (INE) on Thursday. The rise in CPI is primarily attributed to escalating fuel prices, coupled with an uptick in electricity costs, which experienced a more significant rise in January than during the same month last year.
Effective January 1, 2025, the Value Added Tax (VAT) on electricity reverted to 21% from the 10% rate that was in place until the end of December 2024. This policy change has contributed to the inflationary pressures observed.
In a statement, the Ministry of Economy, Commerce, and Business clarified that the increase in inflation during January is closely aligned with the rise in both fuel prices and electricity rates amidst ongoing global oil price hikes. The recent CPI increase indicates a troubling trend, marking four consecutive months of rising inflation, a clear concern for policymakers and consumers alike.
Additionally, the INE's preliminary data included an estimate for underlying inflation, which excludes unprocessed foods and energy products. This underlying measure revealed a slight decrease of two-tenths in January, settling at 2.4%, and remaining six-tenths below the general index.
On a monthly basis, the CPI's rise of 0.2% in January 2025 represents a higher increase than the 0.1% rise recorded in December 2024, indicating an accumulating trend of monthly inflation increases. Moreover, the Harmonized Consumer Price Index (IPCA) rose by one-tenth in January to 2.9%, although it saw a decline of 0.1% in monthly terms.
The INE is expected to release the finalized CPI data for January on February 14, 2025, which will provide further clarity on the inflation landscape and its implications for the economy.
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