Spain's Inflation Continues Downward Trend as CPI Hits Lowest Level Since March 2021
The Consumer Price Index (CPI) in Spain saw a notable decrease of 0.6% in September compared to the previous month, resulting in a year-on-year rate cut of eight-tenths to 1.5%. This figure marks the lowest inflation rate since March 2021, when it registered at 1.3%. The latest data was published by the National Institute of Statistics (INE) and aligns with previous projections reported at the end of last month.
The moderation in the CPI to 1.5% can largely be attributed to a drop in fuel prices, electricity costs, and the prices for tourist packages. Additionally, there was a significant reduction in food prices, which saw a year-on-year rate decrease of seven-tenths to 1.8%, marking its lowest rate since October 2021. The decline in food prices was primarily driven by the reduction in the cost of oils and fats, alongside a slight decrease in fruit prices. The price increase in legumes and vegetables was lower than observed in September 2023.
This decline signifies the fourth consecutive month of decreasing inflation rates after a rise in March, April, and May when the CPI peaked at 3.6%. The underlying inflation, which excludes unprocessed food and energy products, moderated by three-tenths in September, reaching a rate of 2.4%, which is nine-tenths higher than the general rate, representing its lowest rate since January 2022. In September, the Harmonized Consumer Price Index (HICP) recorded a year-on-year rate of 1.7%, a decrease of seven-tenths from August, while the monthly variation of the HICP stood at 0.1%.
On a monthly comparison, from August to September, the CPI decreased by 0.6%, marking the most significant monthly decline in two years—specifically since September 2022. The downturn was chiefly influenced by falling costs in tourist packages, fuels, passenger air transport, and electricity. In contrast, the prices for clothing and footwear saw a rise of 2.4% attributed to the onset of the autumn/winter season.
The continued decline in inflation illustrates the resilience of the Spanish economy, as it reconciles significant economic growth while maintaining lower prices. The Ministry of Economy commented on the decrease in oil prices in September, which fell by 2.2%. This consistent reduction is facilitating food inflation's approach to the general index, supported by various measures adopted by the government, as noted by Carlos Cuerpo, the head of the Ministry.
The ministry further emphasized that these factors, combined with the positive evolution of the labor market and rising wages, are enhancing the purchasing power of citizens and improving the real income of households. This favorable economic trajectory underscores Spain's position as one of the leading countries in the euro area in terms of economic growth, with GDP growth in the second quarter reportedly four times higher than the euro area’s average.
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