The good performance of electricity and fuel prices has slowed March inflation down to 3.3%, also thanks to the statistical effect of comparing with the same month last year, when prices they were fired by the outbreak of the war in Ukraine. This is the good news. The not so positive part is that the underlying is still very high, it is reduced by only one tenth and remains at 7.5%; the bad part is that the rise in the price of food continues at very high rates. In March it was 16.5%, only one tenth less than in February, when it marked the historical maximum. It means six consecutive months with food inflation above 15%.
It is a very widespread trend, so that the vast majority of foods have risen in March by more than 10%. The ones that stand out the most are sugar, with an increase of 50.4%, butter (37.7%), olive oil (32.1%), whole milk (30.8%) and skimmed milk (30.2%).
"There are three reasons that explain these high rates of food. The drought, the temporary lag in the food chain to apply the reduction in cost prices and a certain inertia generated by resistance to lower prices in times of uncertainty", explains José Emilio Bosca, from Fedea and professor at the University of Valencia.
The same idea is echoed by María Jesús Fernández, from Funcas, who affirms that "for farmers, there are prices that have lowered them, such as energy, but others, such as fertilizers and feed, remain at high levels. Only now are they starting to remit the prices paid by farmers, and everything is relayed with a delay in the food chain”.
In terms of general inflation, there has been a drastic moderation, as it has gone from 6% in February to 3.3% in March, but this does not mean that they have lowered prices. The point is that the year-on-year CPI is calculated by comparing it to the same month of the previous year, in this case, March 2022, when the war in Ukraine caused energy prices to spike. In this way, the forecast for the coming months is that inflation will have high volatility during the first half of the year, with significant ups and downs due to this cascading effect. In April, for example, a rebound is expected, but without reaching the previous figures.
On the other hand, underlying inflation, which does not take into account energy or fresh food, has slowed by a tenth compared to the previous month and stands at 7.5%. It is the first moderation since September, although it is true that it is only one tenth less than in February, and that it is already four consecutive months above 7%.
"The sharp drop in general inflation is almost entirely due to the cascading effect on energy products. The underlying CPI has fallen only slightly, which indicates that the rest of the prices, the non-energy ones, continue to grow at an intense pace", says María Jesús Fernández, from Funcas.
