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Food prices dropped from an inflation of 5.3% to 4.3% in March throughout Spain, however the cost for oil continues to soar, according to latest statistics.
It's the lowest rate in more than two years, since November 2021, according to the Spanish National Institute of Statistics (INE). This brings the rate down by more than 12 points in the past year.
This decline was mostly due to lower prices for pulses and vegetables, which increased in the same month of 2023. It was also influenced by the rise in meat prices, which was lower than in March 2023. However, the cost of olive oil continues to skyrocket, with prices rising by 70% since March 2023, and by 200% since January 2021, meaning its cost has tripled in three years.
The government's withdrawal of part of its support measures to combat the impact of inflation on households and businesses has had a direct effect on the inflation rate since the start of the year. In March it rose again by four tenths of a percentage point to 3.2%, mainly due to the rise in IVA (Spain's sales tax) on electricity after part of the anti-crisis measures were withdrawn. IVA on electricity had been reduced since June 2021, almost three years ago.
In January inflation was at 3.4%, but in February prices were contained at 2.8%, the first time the rate fell below 3% since August 2023. The statistics office blames the rise in March on the price of electricity, but also on the rise in fuel prices compared with last year's drop.
The rate that did continue to fall in March was core inflation. This is the rate that allows experts to analyse the behaviour of prices in the daily basket of products and services, excluding energy costs and unprocessed food, which are the most volatile. The underlying rate was 3.3% in March, two tenths of a percentage point lower than in February and the lowest rate in two years. It is now only one tenth of a percentage point above headline inflation.
"Inflation data continue to reflect the Spanish economy's ability to reconcile the highest economic growth among the main countries in the Eurozone with price moderation and the maintenance of support for the most vulnerable," according to the ministry of economy headed by Carlos Cuerpo, who added "the purchasing power of families and the competitiveness of Spanish companies continues to improve."
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