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Date Published: 15/12/2023

Inflation falls in Spain as food and fuel prices drop

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Core inflation stood at 4.5% last month, the lowest figure seen in Spain since April

Inflation falls in Spain as food and fuel prices drop

The National Institute of Statistics (INE) has confirmed that inflation was reduced to 3.2% year-on-year in November, a decrease made possible in particular by stabilising food and fuel prices.

Inflation of groceries stood at 9% last month, and while this figure is still well above where it was before the global crisis caused by the war in Ukraine, shoppers will certainly have noticed a welcome difference in the piece of staples like bread, milk, eggs and cheese.

However, if we take away the cost of energy and unprocessed food from the calculations, November inflation still reached 4.5% - a far cry from the 2% target set by the government at the beginning of the year.

And when it comes to the shopping basket, more products than not are still more expensive than they should be. Olive oil, for example, was a shocking 66.7% pricier last month than the same time in 2022, while rice has risen by a considerable 17.1%. Also notable are legumes and vegetables (16.8%), confectionery products (16.6%) and fruit and vegetable juices.

In October, Spain became the third country in the EU with the highest increases in food prices, in part due to the brutal rebound in the price of olive oil, but also to other factors that are more difficult to quantify.

These persistent high food prices have prompted the Spanish government to extend the VAT reduction on groceries until at least June 2024, which should avoid a new inflation spike in January.

Fuel and energy costs

There is some good news to be had, as certain other essential products have come down. The price of fuel, specifically, was 2.1% lower this November than last, affording drivers a good saving.

Diesel recorded a decrease of 5.7% compared to last year, and while petrol registered a 2.7% year-on-year price increase, this still represents a significant drop compared to October's figure (8.6%).

Likewise, the price of electricity, which in 2022 was the main headache for households in Spain, has dropped by 13.6% in the last 12 months. But while electricity bills have certainly been experiencing year-on-year price declines for 14 months, this rate has definitely begun to slow down.

The Spanish government will now use this data to decide if it will extend any of the anti-crisis energy measures beyond December 21. Apparently, the funds are available in the public coffers but this could lead to a reprimand from Brussels, which has been calling for months for EU Member States to withdraw these types of support measures without delay.

However, countries like Germany - much more affected by the impact of the war in Ukraine - have already announced that they will extend tax cuts on energy prices into 2024.

In other news: How will house prices in Spain behave in 2024?

Image: Freepik

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