Food inflation in Spain: Prices at supermarkets grew by more than 7% last month – but rate of increase is dropping

SPAIN’S inflation rate for December 2023 was confirmed at 3.1%, confirming advanced figures released by the National Institute of Statistics(INE) on Friday.

Crucially food inflation with the notable exception of olive oil, is at 7.3%- the lowest rate since March 2022, after recording a 1.7% fall last month.

In December, lower rises in milk, egg, cheese, bread, cereals and meat products were key to the price slow down.

Olive oil reported an annual rise of 54.6%, and between January 2021 and last December, the price has skyrocketed by 165.5%, with olive prices rising by 44% on average in 2022.

After the escalating costs of the so-called ‘liquid gold’, the biggest annual price hikes through to December were sea passenger travel (23.6%), international travel (13.3%) and domestic tourist packages(12.9%).

On the other hand, what became cheaper in the last month of the year compared to December 2022 were other oils (-29.1%); natural gas (-20.3%); butane and propane (-18.5%); electricity (-17.3%), and combined passenger transport (-15.4%).

Core inflation, which strips out unprocessed food and energy, registered the lowest rate since March 2022, after falling by seven tenths of a percentage point in December, to 3.8%.

Average inflation in 2023, as confirmed by the INE, was less than half that of 2022, going from 8.4%- the highest since 1986- to 3.5%.

Without taking into account the reduction in the excise duty on electricity and the variations on other taxes, the year-on-year CPI reached 3.4% in December, three tenths above the general rate of 3.1%.

The trend towards price normalisation is consolidated, according to experts.

“Things are on the right track; the rate of price growth is slowing, especially in recent months,” explains Maria Jesus Fernandez, senior economist at Funcas.

“But it’s going to continue to be a slow process,” he warns.

Jesus Fernandez does not expect inflation to fall below 2% this year, which is the European Central Bank’s target, but still predicts interest rate cuts from June.

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