Despite the drop in energy prices in May, the sharp rise in fuel and food prices has pushed inflation up almost half a point since April
In March inflation reached a record close to double digits (9.8%), the highest in four decades, but in April the situation eased slightly to 8.3%. A trend that was broken in May by shopping cart pushing, causing the CPI percentage to return to 8.7% in May, the National Institute of Statistics (INE) reported Monday. Inflation was four tenths higher in May than in April, the highest since 1986.
This evolution is due to the fact that fuel and food prices rose again in May, so that, despite the lower electricity price, the rate of inflation continues to rise. The INE points to the variation in core inflation (which does not take into account fresh food or energy products), as it rose by five tenths from April to May to 4.9%, the highest rate since October 1995.
They assure the Ministry of Economy that this recovery is below the maximum registered in March and that the measures taken in response to the consequences of the war (such as the fuel subsidy of 20 cents per liter) are clearly limiting the price increase. In addition, ministry sources assure that the entry into force of the restriction on the price of gas on the wholesale market will “provide additional insurance against possible increases in energy”.
For all these reasons, they maintain their forecast that inflation will gradually slow down in the second half of the year, albeit “without excluding fluctuations during the summer months” due to the high uncertainty arising from the global economic context.
However, the fact that the basket pulls the CPI is a bigger issue than it was when energy did. Core inflation is a more complicated rate to lower than the general rate, which takes into account the price of fuel and energy, which are more volatile over time. “It is a problem for the Spanish economy because it is a course that perpetuates itself over time,” explains the director of the Funcas Economic Situation, Raymond Torres, to this newspaper. This means a “loss of competitiveness for Spain”, the economist warns, stressing that this is the measure the European Central Bank (ECB) is trying to adjust its interest rates and is the “main barometer of the economy’s progress”.
Source: La Verdad
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
