In inflation terms, 2023 ended with something resembling an open door to the desired normality. This past December, prices moderated by one tenth, placing the interannual CPI at 3.1%. Prices still high, but far from the 6% that started last year, and with reasonable future prospects. December marks the second consecutive month with moderation in inflation in a year marked by strong ups and downs due to the step effect, that is, the comparison with the same months of the previous year. The 3.1% is the confirmation of the data advanced by the INE on December 29.
The moderation of food stands out, which stands at 7.3%, the lowest rate in almost two years, specifically since March 2022. It is 1.7 points less than in November. It is the most important reduction in recent months, although this rate is still very high. Food prices peaked in March when they rose 16.5%, and since then, they have been moderating, but very slowly. In October and November they were already at 9.5% and 9% respectively, until a more pronounced drop in December.
This slowdown is largely due to the fact that the prices of milk, eggs and cheese, bread and cereals, and meat rose less than in December of last year. And also that legumes and vegetables fell, compared to the increase in 2022. On the other hand, olive oil remains intractable, with an increase of 54.6%. If the evolution of this product is examined in more detail, it can be seen that in one month, between November and December 2023, it has increased by 0.5%; in one year, the aforementioned 54.6%; and if we go further, from January 2021 to the present, no less than a 165.5% increase.
"The behavior of foods has been better than expected, with processed foods decreasing and unprocessed foods stable," says María Jesús Fernández, from Funcas. In any case, she considers that it remains to be seen if this moderation is consolidated. "It is too early to say if it means that the inflationary pressure in food is over, perhaps it is something specific and not a change in trend. A single month is not enough to establish it," he adds.
If the average for the entire year is examined, inflation stands at 3.5%, nothing like the 8.4% average in 2022. They are almost five points below. Numbers that challenge the traditional axioms of central banks, because inflation has moderated, at the same time that salaries increased, jobs were created and GDP grew. The lowering of energy prices throughout the year has been decisive. And for 2024 a similar average inflation is expected. The Bank of Spain places it at 3.3%.
For Ángel Talavera, chief economist for Europe at Oxford Economics, "it is confirmed that the disinflationary process continues and inflation is likely to move below 3% in 2024. But it is expected that we will have high volatility in the data for the next months due to the usual readjustment of prices in January, the impact of the government measures as well as the fluctuations that we continue to see in food products, so the journey back to the 2% objective is probably not going to be smooth.
A forecast in which Fernández de Funcas agrees. "The reduction in inflation is slow and in some components of the service sector, such as clothing and footwear, there is still inflationary pressure," he says.
A 2024 in which inflation is expected to be around or below 3%. Here the tendency of prices to slow down is mixed with a contrary current, that of the partial withdrawal of anti-inflation measures, although it will have a minor impact, because it is partial and will be applied gradually.
