Inflation tightens again in April for the second consecutive month. The general CPI rate would have risen one tenth in relation to March to stand at 3.3%, according to data released this Monday by the National Institute of Statistics (INE). This greater rebound is due to what is known as ‘step effect’, since gas and food prices performed better in April a year ago than they have done throughout this month. In monthly terms, prices rise seven tenths.
The INE recalls that this evolution is due, above all, to the rise in gas prices, which had just dropped in April 2023 (and have been affected by the escalation of tension in the Middle East), and the increase in food prices, which would have been higher than last year. Also, although to a lesser extent, to the electricity, whose prices fall, but less than in the same month of the previous year. On the contrary, the institute highlights the drop in prices for leisure and culture, which rose a year ago.
The inflation data give a mixed bag, since the underlying inflation, which excludes energy and fresh food prices from its calculation and tends to reflect more structural tensions, moderates by four tenths and It stands at 2.9%, below the general rate for the first time in almost two years. This is, in fact, the reference that the European Central Bank (ECB) keeps in mind when deciding the steps of its monetary policy.
The general rate had risen four tenths in March to 3.2% after returning the VAT rate on electricity to 21%. The Government kept it reduced for three years to cope with the effects of the energy crisis in the bills of households and companies. At the same time, food and non-alcoholic beverages rose on average 4.3% last month, their lowest rate in more than two years, since November 2021.
Regarding the annual rate of harmonized CPI (HICP), which is the reference taken by the community statistics office (Eurostat) to be able to make comparisons between different countries, this month it would have been at 3.4%. , one tenth above that registered in March.
The Ministry of Economy, Commerce and Business insists that the inflation data continues to reflect the capacity of the Spanish economy to make the highest economic growth among the main countries in the euro zone compatible with a moderation of prices and the maintenance of support for the most vulnerable. “The gradual moderation of inflation translates into the improvement of the purchasing power of families and the competitiveness of Spanish companies,” they maintain in the department led by Carlos Body.
The ECB remains on alert before deciding on the first rate cut
The European Central Bank remains alert to possible tensions in Eurozone prices in a context of weakness in the main economies of the region – stagnation of German and French GDP. So much so that the next data will be key when determining whether the issuer begins to lower interest rates in June, as analysts and experts initially expect.
It would be the first movement in this direction since July 2022, when the organization led by Christine Lagarde began the most intense rise in the price of money since the creation of the euro. Reference rates remain at 4.5%, their highest level since 2001, since last September.
For now, the behavior of prices in the area as a whole gives room for this, given that the CPI moderated to 2.4% in the euro zone in March, placing it very close to the medium-term objective that has been set. the entity. This, in a context in which the labor market continues to show enormous resilience and constitutes the main source of tensions for the issuer (due to the pressure that salaries may exert) together with geopolitical tensions and their possible effects on the prices of energy.
