Far from containing itself, inflation continues to rise with no forecast of improvement until the end of the year. The National Institute of Statistics (INE) confirmed yesterday that prices rose by 3.5% in September in year-on-year terms, nine tenths more than a month earlier. The increase is the result of a base effect – the comparison is no longer made with respect to the months of 2022 when prices rose a lot – and also of the unexpected increase in fuel and electricity prices, which cast another shadow of uncertainty
The consumer price index (CPI) has been on the rise for three months and has already returned to the levels of April. It also does so after experiencing in September the biggest rise since June 2022.
The good news comes from core inflation, which excludes unprocessed food and energy, which fell by three tenths to 5.8%. It is the lowest rate in a year and three months and contrasts with the peak of 7.6% reached in February. As it remains above 5.5%, the Central Government will automatically renew the VAT reduction on many foods until the end of the year.
Among the products with the highest year-on-year increase, gasoline appeared in September, with a rise of 15.8%. In the monthly comparison, fuels continued to rise: 6.5% in July, 9.9% in August and 7.1% in September.
In the case of electricity, it went from being 49% cheaper in August compared to the same month in 2022 to 38% in September. Its price compares against historically high levels and, although it remains lower, the gap has narrowed, putting pressure on the CPI.
Added to the innovative energy factor is the persistent rise in food prices, which has been in double digits for eighteen months. In September, the year-on-year increase was 10.5%, similar to that of the previous month and three tenths below that of July. The big increase in food took place in February, with 16.6% year-on-year.
Of the ten most expensive products, eight are food, with olive oil at the top. They have risen by 67%, well above the 40.5% for sugar, 20.5% for potatoes and 18.5% for rice.
Within the large categories of consumer products, food is also the one that rises the most, ahead of 6.3% of hotels and restaurants, 5% of leisure and culture, and 3.8% of transport, and this also includes fuels.
The increase in the CPI already paints a scenario of rising inflation until the end of the year. The director of the economic situation of Funcas, Raymond Torres, points out that the rise in September was "something higher than what had been predicted" despite "the de-escalation in the central core of prices". Its forecast is that, in year-on-year terms, inflation will remain close to 5% until the end of the year and begin to moderate next year. However, it will still remain above 2% until 2025, warns Torres. Funcas also predicts that the CPI will close the year with an average annual rate of 3.8%.
This forecast is below the one offered by the CEOE yesterday, consisting of an average of 4% in 2023 as a whole due to the rise in energy prices.
Manuel Hidalgo, senior fellow of EsadeEcPol and professor at Pablo de Olavide University, appreciates a "certain surprise with regard to some items such as fuels and electricity", and warns that the conflict between Israelis and Palestinians could exert a additional pressure on oil. For this reason, he advises "postponing the withdrawal of Central Government aid for a few months, perhaps until the spring" to reduce the effect of inflation on families. In 2024 the CPI could moderate by 3%.
The Minister of Economic Affairs, Nadia Calviño, said yesterday that there is still no decision on the withdrawal of aid. The Spanish Government also points out that inflation in Spain is below the euro zone average, while growth is higher.
