Inflation in Spain plummets to lowest level in 2 years

The drop in fuel and food prices in Spain has pulled inflation down to 3.2%

Consumers should have noticed a few extra euros in their pockets in May, as inflation in Spain dramatically dropped to 3.2% to hit its lowest level since July 2021. This, according to the provisional data released by the National Institute of Statistics (INE), is thanks to fuel becoming much cheaper and the cost of general food items levelling out a bit.

As a result, core inflation, which excludes items like food and energy that are subject to frequently volatile prices, has also fallen for the third consecutive month to stand at 6.1%.

Inflation "continues the downward path that began in the first quarter of the year," highlighted the Ministry of Economic Affairs, headed by Nadia Calviño, who has reiterated that the INE data proves the effectiveness of the government´s measures, such as a VAT reduction on staple grocery items, placing Spain as "one of the countries with the lowest inflation in the European Union."

While products and services are still running on the expensive side, it´s worth remembering that inflation reached a wallet-busting 10.8% last July and this time 12 months ago, it stood at a rate of 8.7%, more than double the current figure.

But although the price of food and non-alcoholic beverages rose less this May than the same month in 2022, the true picture will be painted in the next couple of weeks, when the real impact of the drought on crops and grocery costs will be known. The forecast isn´t all that optimistic since in April, which was the driest ever recorded, food inflation stood at 12.9%, well above the average.

The European Commission revised its inflation forecasts for Spain on May 15. In their spring screenings, Brussels cut its forecast downward, so it expects an average year-on-year variation of the CPI of 4% in 2023. However, the forecast for next year is 2.7%, suggesting that the drop in inflation will slow down considerably.

In other news: Costly fault in diesel engines purchased in Spain after 2015

Image: INE