Spain's inflation falls below 2%

Spain's inflation rate has fallen below 2% for the first time in two years. In June the rate dropped to 1.9%, according to data released on Friday (30 June) by the country's INE national statistics institute. This rate, almost 1.5% lower than in May (3.2%), confirms that prices are being contained thanks to the drop in energy prices, measures in food and transport and the 'step effect'.

This effect is explained by the fact that in June 2022, prices were at their highest level of the inflationary crisis, reaching 10.2%. This value continued to rise until it reached its maximum peak, in July, of 10.8%. Therefore, when comparing prices now with the very high values of last year, there is a statistical effect that takes the rate to the lowest since April 2021.

But these results cannot be underestimated, as Spain is the eurozone economy with the lowest Consumer Price Index (CPI) rate. "The effectiveness of the main measures to reduce taxes and bonuses has been confirmed," the Finance Minister, Nadia Calviño said.

Core inflation, which does not include fresh food or energy products, fell below 6% for the first time in a year to reach 5.9% — 0.2% less than the previous month. This rate will be the reference for whether or not the reduction in IVA Spanish sales tax, on basic foodstuffs, which the government has just extended until 31 December will be maintained. The Cabinet specified that if this underlying rate falls below 5.5% in the month of September this reduction will not be applied as of 1 November.