Spain's Inflation Shows Signs of Easing: May CPI Drops to 2%
The Consumer Price Index (CPI) in Spain recorded a year-on-year decline of two-tenths in May, reaching 2%, marking its lowest rate since last October when it stood at 1.8%. This data was released this Friday by the National Institute of Statistics (INE). Notably, this figure does not align with previous forecasts from the end of last month, which anticipated a more significant drop of three-tenths down to a year-on-year rate of 1.9%. Despite the discrepancy, the easing of inflation in May continues a trend of declining year-on-year rates for three consecutive months.
The INE attributed this moderation in the CPI to decreases in tour package prices and a more modest increase in electricity costs compared to the same month in 2024. The Ministry of Economy, Trade and Business emphasized that the reduction in prices observed in May was largely influenced by favorable trends in tourism-related services, air transport, and the performance of electricity prices.
For instance, the leisure and culture category saw its year-on-year rate fall by 2.2 points in May, down to 0.5%, primarily due to the decrease in tour package costs. In contrast, the housing segment saw its year-on-year rate reduced by four-tenths, landing at 3.8%, owing to changes in electricity pricing.
However, the food and non-alcoholic beverage sector experienced an uptick, raising its year-on-year rate by five-tenths in May, now at 2.5%, mainly due to rising fruit prices.
Core inflation, which excludes unprocessed food and energy products, also showed a decline of two-tenths in May, coming down to 2.2%. This figure was slightly higher than expected, with prior forecasts predicting a drop to 2.1%. The moderation in core inflation indicates a return to a lower trajectory following a four-tenths increase observed in April.
Furthermore, the harmonized CPI (HICP) also reflected a two-tenths decrease in its year-on-year rate for May, which now stands at 2%, showing consistency in the CPI trend. On a monthly basis, comparing May to April, the CPI increased by 0.1%. This uptick represents the continuation of an upward trend in inflation, which has been rising for eight consecutive months.
The monthly increase in the CPI was driven by a 2.5% rise in clothing and footwear prices attributed to the transition into the spring/summer season, along with a 0.5% increase in food prices due to higher fruit costs. Conversely, there was a decline in the leisure and culture segment's monthly rate by 1.9%, primarily due to falling tour package prices, and a 1% decrease in transport costs owing to reduced prices for fuels and personal vehicle lubricants.
Overall, while the decline in inflation rates is a positive sign, the monthly data indicates persistent pressures in certain sectors, particularly food and clothing, that could impact consumers in the near term.
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