The rise in fuel and food prices is the cause of the rise in prices. The core interest rate rises by six-tenths to 5.5%, the highest since August 1993
Inflation remains the indicator that worries the Spanish government. After ending May at 8.7%, four tenths above April, the June CPI closed at 10.2%, one and a half points above May and the highest price since April 1985. The annual price of the underlying asset rises to 5.5% , six-tenths of an increase from the previous month and the highest since August 1993.
The rise in the prices of fuel, food and non-alcoholic drinks, as well as of hotels, cafes and restaurants have had a notable impact on the escalation.
The advanced data has beaten all market forecasts and places the economy and the Executive in a somewhat helpless manner as the measures taken so far to curb the price rise have not fully impacted the indicator.
Experts warn that the data may not have peaked yet, mainly due to the evolution of energy prices.
From the government, they calculate that the package of measures approved with the gas cap and the anti-crisis plan (both the existing ones that have been extended until the end of the year and the new ones included) will contain the price increase by 3.5. points this year. Data that does not match what the INE collects month after month in the so-called CPI at constant prices, which reflects exactly this behavior of the indicator in the absence of measures.
Inflation is in fact one of the recent battlehorses between Economics and the Institute of Statistics, which ended with the recent resignation of Juan Manuel Rodríguez Poo at the head of the institution.
It has been months since the Executive ruled that in its calculations of the indicator, the INE did not calculate the free rate for electricity (the rate that customers freely agree with the companies), including only the regulated rate that is directly linked to wholesale prices. , which would affect the increase in the calculation of the CPI. The INE has been working for some time to be more precise about this, but states that it is extremely complex to get this data from the electricity companies.
Whatever the correct calculation, the truth is that prices continue to rise, which has a full impact on the shopping basket and, again, on household consumption, one of the pillars of economic recovery.
In this environment, central banks have set themselves the goal of ending inflation they labeled as “temporary” just a few months ago. The passage of time has shown them to be wrong, forcing major monetary institutions to accelerate stimulus withdrawals and prioritize the fight against rising prices, even if that means an economic recession.
European Central Bank (ECB) president Christine Lagarde assured this week that the institution is ready to go “as far as necessary” to ensure inflation stabilizes at 2% in the region over the medium term. In this way, Lagarde is confident that the instrument to combat the fragmentation of the markets in the eurozone will allow the European bank to raise interest rates “as much as necessary”.
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.
