The easiest formula to discover the origin of the rise of three tenths of inflation registered in August is to remember the last times we filled the car tank during that month. Because fuel is largely responsible for this increase in inflation to 2.6%. The liter of petrol has exceeded the level of 1.7 euros, the highest value of the year, and that of diesel has exceeded that of 1.6 euros.
It is gasoline that has pushed up inflation, especially to compare with August of last year, when prices fell. On the other hand, electricity acts in the opposite direction, which has risen, but less than during August 2022.
In this way, there are two consecutive months of rising inflation, even though the truth is that prices are following the planned script. After reaching the lowest level in June, below even 2%, a figure that is the object of the ECB's desire, inflation picked up in July and now, again, in August. Looking ahead to the coming months, a gradual upward trend is expected to continue, although remaining at moderate levels, nothing to do with 2022. Funcas' forecasts are that by the end of the year about 4.5% or 5%.
In this evolution, the base effect is decisively involved, the comparison with the same months of the previous year, in which the war in Ukraine and its economic derivatives led to runaway inflation in the first semester, which began to moderate gradually during the second.
For its part, underlying inflation, which does not take into account either energy or fresh food, is swelling. It is true that it moderates, but only by a tenth, remaining at 6.1% according to the data presented yesterday by the INE. In this way, it adds up to four consecutive months of around 6%, which is a worrying element because it is the indicator that facilitates the underlying price trend.
"There are still significant inflationary risks. One is energy prices, mainly due to the increase in the price of oil and gas, with specific factors in this case such as the strike in the sector in Australia. Another element of concern is food due to the phenomenon of drought and climate, which reduce supply and this results in higher prices", says Raymond Torres, from Funcas.
For his part, Oriol Aspachs, from CaixaBank Research, also emphasizes that fuels "are a risk that must be taken into account, they always fluctuate and more so with the current geopolitical situation". However, he points out that "there are convincing signs that the bulk of inertial prices is deflating, even if very gradually".
The governor of the Bank of Spain, Pablo Hernández de Cos, has minimized the importance of this rise of three tenths, since it is "compatible with this medium-term vision in which inflation will gradually converge towards the Bank's objective Central European (ECB)". In statements to journalists in Barcelona, he added that the data is exactly the same as the internal forecast that the Bank of Spain had and emphasized that "monthly data are always very affected by base effects, by spikes in the energy component of the most volatile".
The Ministry of Economy emphasizes that, with these rates, Spain is consolidating itself as one of the euro zone countries with the lowest inflation, after lowering it by nearly 8 points last year. "This favors the competitiveness of Spanish companies, the gain in market share and the increase in the purchasing power of wages", they add to Economia.
For his part, the general secretary of the UGT, Pepe Álvarez, expressed concern about the high levels of underlying inflation and called on companies to stop their "strategy of big profits at the expense of the working class". a strategy that he stated is based "on the continuous elevation of final prices, despite the moderation of wage costs".
If in the macroeconomic field Spain seems to have inflation relatively well on track, in the micro field there are elements that harm families, and especially the most vulnerable ones, in a critical way. This is especially the case with food prices which, along with other expenses, eat into the income of households, who spend more than they earn. A clear indicator of this fact is that the price of food in July rose by up to 10.8% year-on-year (in August the advanced CPI data does not yet provide this disaggregated information). In this area, if first it was the increase in energy costs that caused prices to rise, then the drought has been an additional element that, with the reduction in production, has aggravated already very high prices and to which the it is difficult to moderate.
