• Food The Spanish countryside raises prices by 16%, the third largest increase in the EU, despite lowering its inputs by 8%

Inflation has accelerated again in the month of September with what in Spain we have had prices 3.5% higher than in the same month of the previous year, which represents a rebound of almost one point in the year-on-year rate compared to the figure for August (2.6%). It is the largest rise in the index for a single month since June 2022 and is mainly due to the boost of electricity and gasoline.

Thus, if in August the goods and services we consume were on average 2.6% more expensive than in August 2022, this September the cost of living is 3.6% higher than a year ago. Prices are always compared with those of the previous year, but given that the country accumulates three consecutive years of skyrocketing inflation (last year it was on average 8.4% and the previous year, 3.1%), the country today has much higher prices than it had before the pandemic, or above all, before the inflationary wave occurred due to the mismatch between demand and supply when the recovery began.

As advanced on Wednesday by the National Institute of Statistics (INE) and will have to confirm in mid-October, in the month of the 'back to school' there has been an increase in the price of goods and services of consumption of 0.2% per month, compared to the prices that the country had in August, which is the eighth consecutive month in which prices do not fall (in January of this year they fell by 0,2%).

Core inflation - which does not measure the evolution of the price of energy products or fresh food, as they are the most volatile - remains at too high levels due to the contagion of the rise in prices to the entire economy and, in particular, to processed foods. In September it stood at 5.8%, three tenths below that of August and at the lowest level since June 2022, but still tripling the level that the European Central Bank considers reasonable: 2%.

It should be borne in mind that the core is an indicator that is understood as structural inflation and shows the rise in prices to which the economy tends in the medium term, hence it is important to control it in order to have signs that general inflation will also fall to healthy ground.

"These data reflect the base effect of electricity prices and, to a lesser extent, fuels," explained the Ministry of Economic Affairs, alluding to the fact that these products were cheaper a year ago and, therefore, drive up the index. Even so, he celebrated that "Spain has been among the countries with the lowest inflation and highest growth in the euro zone for more than a year".

The rebound will last until mid-2024

The data advanced by the INE coincides with the forecast that Funcas economists had, who had already warned that until the end of the year we will see a rebound in inflation month by month until in December the index is around 5% year-on-year, because in the second half of last year prices slowed down and from that comparison this statistical increase arises.

The Bank of Spain also issued the same warning last week, predicting that "inflation will pick up again between now and mid-2024" and raising its average year-on-year inflation forecast for 2023 from 3.2% to 3.6%, and that of 2024 from 3.6% to 4.3%.

"The recent increase in oil prices, the upward base effects of the fall in fuel prices in the latter part of 2022 and the expiry in 2024 of the public measures deployed to mitigate the consequences of the energy crisis will lead to a pick-up in headline inflation until the middle of next year. However, a gradual slowdown in non-energy inflation is expected," they said.

Our country will have to wait two more years (until 2025) to achieve an average inflation from January to December of that year of 1.8%, finally a controlled level below 2%, but even then we will not be able to say that prices have fallen: they will continue to rise systematically in 2023, 2024 and 2025, only they will do so more slowly.

  • INE
  • European Central Bank