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The Spanish government's withdrawal of part of its support measures to combat the impact of inflation on households and businesses is having a direct effect on the inflation rate since the start of the year.
In April it rose again slightly to 3.3%, mainly due to the rise in food and gas prices, one tenth of a percentage point higher than in March. According to INE national institute of statistics on Monday, the underlying inflation rate stood at 2.9%, four tenths less than in March and the lowest rate in two years.
After almost three years of financial aid to combat the price crisis - for example, Spain's sales tax (IVA) on electricity had been reduced since June 2021 - the government began to withdraw it on 1 January, a month in which inflation stood at 3.4%. In February, prices were contained at 2.8%, the first time the rate fell below 3% since August 2023, but in March it rebounded to 3.2% due to electricity and fuels, compared to the drop of a year earlier.
The monthly rate (April over March) rose by seven tenths of a percentage point, and since the beginning of the year it has been nothing but increases. Despite this, the ministry of economy said the growth of the Consumer Price Index in April "was affected by the base effect, due to the better performance of gas and food prices last year", while electricity continued to be cheaper.
Minister Carlos Cuerpo pointed out these figures "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". The gradual moderation of inflation "translates into an improvement in the purchasing power of families and the competitiveness of Spanish companies", according to Cuerpo's department.
The underlying rate has continued to fall in April. This is the rate that allows us to analyse the behaviour of prices in the daily basket of goods and services, excluding energy costs and unprocessed food, which are the most volatile. It peaked in February 2023 (7.6%) but since then has gradually fallen to 2.9% in April, the lowest rate in two years.
We will have to wait until mid-May for the INE to publish the final CPI data for April to see how much food prices have risen during the month. The March data revealed that grocery prices started to moderate after two years at record levels, reaching 4.3%, still more than one point above the general inflation rate. Some basic foodstuffs continue to soar in price, such as olive oil, which increased by 70% in March compared to the previous year and has risen by 200% since January 2021, meaning its cost has tripled in three years.
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