Spain's inflation rate reaches lowest number in almost two years

INFLATION in Spain is at its lowest rate since July 2021 with core inflation- excluding food and fuel prices- down for the third consecutive month.

The Institute of National Statistics said on Tuesday May’s provisional inflation rate is 3.2%- 0-9% less than the same month last year.

The drop has been caused by falling fuel prices, which were still going up in May 2022.

Secondly, there has been a slow down in price increases for food and non-alcoholic beverages.

Core inflation which strips out food and fuel prices has dropped from 6.6% in April to 6.1%- it had been on 7.6% in March.

Experts say that core inflation will continue to fall but with the caveat that the cost of food is subject to the effect that the drought has had on Spanish farmers.

Economics Minister, Nadia Calviño, said: “May’s figures confirm the effectiveness of the Government’s measures against inflation and puts Spain as having some of the lowest rates in the European Union.”

With last year’s summer rates topping double digits, it is inevitable that inflation will continue to fall in annual comparisons.

Chief European economist at Oxford Economics, Angel Talavera, told El Pais: “We are the start of a cycle where we will see inflation fall in the coming months below 3% given that energy prices are well down on a year ago and food inflation is starting to come down.”

“Core inflation should also fall gradually but we will have to pay attention to service sectors like tourism which are likely to be the biggest inflationary component,” he added.

Based on hotel booking data, a record tourist summer is expected with businesses charging higher prices as demand grows as the whole holiday sector is trying to regain lost ground caused by the Covid-pandemic.

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