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Date Published: 28/02/2023

ARCHIVED - Inflation in Spain soars again despite government subsidies

ARCHIVED ARTICLE -

Electricity and food prices have pushed inflation in Spain up by another 6.1%

<span style='color:#780948'>ARCHIVED</span> - Inflation in Spain soars again despite government subsidies

It seems the only way is up in Spain, at least according to the latest data published by the National Institute of Statistics (INE) on Tuesday February 28, which shows that inflation had jumped another 6.1%. This is the second consecutive monthly rise this year, despite that fact that VAT has been reduced on many grocery items for the same period.

Experts attribute the increase to the continual rise in electricity and food prices. In fact, if energy and unprocessed groceries are ignored, inflation actually rose by 7.7% - a new high in Spain.

In monthly terms, compared to January, prices grew 1% in February, the highest monthly variation since June (1.9%) and the highest monthly rate for a month of February in the historical series, since at least 2002 .

In the last few days, bewildered farmers have reacted strongly to the Spanish government’s claims that costs overall have dropped. The Minister of Finance, María Jesús Montero, has downplayed the “small” increase in inflation by claiming that "it will be corrected in the coming weeks and months".

The President of the Government Pedro Sanchez echoed these sentiments, assuring that while Spain will suffer “a slight rebound” in prices due to the global rise in energy costs, this will level out throughout 2023, when the country should experience a significant price drop across the board.

But while the INE figures support the claim that the upward behaviour of prices is due to the rise in the cost of electricity, they only serve to highlight the disappointing impact the promising VAT reduction on food items has really had on the pocket of the average consumer.

On the contrary, in January the CPI for food grew by 0.4% compared to December and farmers were angered by the Minister of Agriculture’s plea that producers make “an effort” to lower the price of fresh produce while their operating costs remain sky high.

Unfortunately, the year-on-year drop in the CPI for fuel has failed to offset the rise in electricity and food and for now at least, it’s the regular consumer that is bearing the brunt.

Image: Freepik

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