Inflation moderates to 7.3% but food continues to climb

The good news is that the moderation of inflation is confirmed.

Thomas Osborne
Thomas Osborne
15 November 2022 Tuesday 06:49
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Inflation moderates to 7.3% but food continues to climb

The good news is that the moderation of inflation is confirmed. The not so good is that food continues to climb, with the shopping basket rising again, something that will remind us of it every visit to the supermarket. In this way, an encouraging figure is combined, an inflation that is reduced for the third consecutive month to 7.3% in October, with a worrying one, food prices shot up 15.8%.

Specifically, prices have gone from a maximum of 10.8% in July to 7.3 in October, coinciding with the data provided by the National Institute of Statistics (INE). It represents a drop of 1.6 points compared to year-on-year inflation in September, one of the highest in two decades, and thus confirms that prices have peaked and are in a downward phase, although it will be a gradual process and large.

One of the main causes of this drop in prices is electricity, followed by the drop in the price of gas and also those of the new clothing and footwear season.

On the other hand, food products continue to skyrocket, with a rate of 15.4%, which is one point more than last month and the highest since the beginning of the series, in 1994. In this field, legumes and vegetables, milk, cheese, eggs and meat. The increase in other oils (58.9%), sugar (42.9%), flour (37.8%) and butter (34.1%) stands out.

"The main novelty is the impact of the drought and the heat wave that has led to a lower production of some foods, and consequently their higher prices," says Raymond Torres, from Funcas, citing the cases of olive oil olive and fruits.

"The increase in the price of food is quite sensitive because it affects the population with fewer resources," says Javier Ferri, from Fedea, who underlines the impact of the war in Ukraine as a trigger for these increases.

With this figure for October, prices have returned to the level they had at the beginning of the year. In this way, it is calculated that 2022 may end with an average inflation of around 8.5%, and that in the next year it will drop to approximate figures of 4.5%, although in this case, the forecast is subject to multiple uncertainties. .

Regarding core inflation, which does not take into account energy or fresh food, it remains at 6.2%, which means staying at the same level as last month, and only two tenths below that of August, which is when it marked its maximum of the year. In reality, underlying inflation took longer to start climbing, and when it consummated it indicates a transfer to other energy products, which is the initial cause of this increase in prices in Spain and in Europe in general. In April 2021, it was at 0, and since then it has followed a constant and practically non-stop increase until reaching its maximum levels this summer.

“The government's plan to moderate inflation works. Despite the uncertainty, the forecasts suggest that the downward path will continue in 2023”, they indicate from the Ministry of Economy, and add that the effect of the Iberian mechanism, the public transport discount and the tax reduction in the gas and electricity bill. They also highlight that Spain is the second country with the lowest inflation in the euro zone, only behind France.