The INE confirms headline inflation closed at 5.9% and core inflation continues to climb to 7.5%, though reduced VAT products moderated by 1.6%
Inflation has been the biggest headache for families since Ukraine’s war crisis began nearly a year ago. The main problem started with energy, but now the main concern is the shopping basket, the prices of which have risen so much that the government has had to act and reduce or abolish VAT on basic foods. Despite this measure, food was 15.4% more expensive last January than a year ago, according to data confirmed by the INE this Wednesday. In fact, even on a monthly basis (January compared to December), the price of food increased by four-tenths.
The 15.4% increase is, of course, three-tenths less than that of December, reflecting the moderation of these increases. And the Ministry of Economic Affairs shows that if only the prices of foodstuffs with reduced or abolished VAT are taken into account, a decrease of 1.6% can be observed compared to December, while the rest of the products in the basket are not affected by the tax cut have increased by 1.4%.
These data in monthly figures (January over December) reflect that bread fell by 0.2%, milk by 1.5% or eggs by 1.5%. But it’s not the only non-VAT foods that became cheaper in the first month of the year according to INE indicators: fresh fruit (-4.2%), potatoes (-1%), flour (-2.3%) and cheese (-0.7%). In addition, the VAT reduction from 10% to 5% resulted in a price reduction of 1.2% for olive oil and 3.5% for pasta.
However, these foods are still much more expensive than a year ago. In the case of bread, the price has increased by 13.5% since January 2022, milk by 33%, eggs by 27%, potatoes by 19%, fruit by 4% or cheese by 20.5%. The product that has risen the most for a year is sugar, which was 52% more expensive in January than in the same month last year.
Overall CPI fell by two-tenths of the annual rate in January to 5.9%, one-tenth more than expected in the INE forecast, due to fuels rising in price with the end of the 20c-per-litre bonus on December 31 . Telephone services and clothing have also increased inflation, according to data published by the INE. This rise breaks five months of declines in annual interest rates since the CPI peaked last July (10.8%).
But the underlying rate continues to skyrocket. In January it reached 7.5%, half a point more than the previous month and the highest since 1986. It exceeds the general index by more than one and a half points. The ministry led by Nadia Calviño indicates that this underlying rate “will reflect the fall in general inflation and energy costs in the coming months”. It is also striking that, despite the increase in fuel due to the end of the surcharge, the general rate has only increased by two tenths.
The president of the government, Pedro Sánchez, was very optimistic about the data published this Wednesday by the INE, assuring during the congressional monitoring session that the latest inflation data show that “food prices are falling due to the government’s policies” .
In the monthly rate (January to December), the CPI registered a decrease of two tenths due to the lower price of electricity (-17.5%), clothing due to sale (-17.2%) and tourist packages (-1.4% ). The prices that rose the most in January compared to December were petrol (12.7%), diesel (10.2%) – both due to the end of the 20 cent discount – and natural gas (7.2%).
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
