Inflation drops to 7.3% in October despite the fact that food is skyrocketing

The shopping basket is 15.4% more expensive than a year ago, the highest rate in the historical series

edurne martinez

Prices moderated in the month of October and there have been three slowdowns. The CPI rate was 7.3% year-on-year, as confirmed by the INE on Tuesday, which represents a reduction of one and a half points compared to the previous month, when it had also fallen by that proportion. From the peak that it reached in July at 10.8%, they are more than three percentage points less in two months.

And this despite the fact that food is skyrocketing, 15.4% more expensive than a year ago, the rate rose one point from September to reach the highest point since the beginning of the historical series in January 1994. Above all the increase in the cost of sugar (42.8%), legumes and vegetables (25.7%), chicken (18.3%), milk (25%), eggs (25.5%) and oil stands out (24%).

The moderation of the inflation rate in October is mainly due to the lower price of electricity and, to a lesser extent, gas, compared to the prices of a year ago. Thus, the group that stands out for its downward influence on the CPI rate is Housing, which decreased by more than 11 points in October to 2.6% precisely due to the drop in electricity and gas compared to the rise October 2021. Also clothing and footwear, due to the new autumn-winter season, rose less this year than in 2021 (1.4%, two and a half points less than in September).

In monthly terms (October over September), the CPI registered a rise of 0.3%, higher than the 0.1% anticipated fifteen days ago by the INE. This is mainly due to the increase in the price of fruit (8.5%) and vegetables (5.1%) in the last month, while electricity fell by 22.5% and gas by 6.4%.

The underlying is still very high, almost reaching the general rate. This index, which does not take fresh food or energy into account, stood at 6.2% in October, which places it only 1.1 points below the overall CPI rate.

By autonomous communities, inflation moderated in all of them. The highest rate occurred in Castilla-La Mancha (8.6%), followed by Navarra (8.45) and Castilla y León (8.1%). Those that registered the lowest rate in October were Madrid (6.3%), Catalonia (6.8%) and the Basque Country (6.9%).

The second lowest rate in the eurozone

Sources from the Ministry of Economy highlight that the drop of more than a point and a half in the inflation rate in October confirms that the measures "work" and that Spain "is capable of creating jobs and reducing inflation." In his opinion, "the price curve is bending" since inflation has been reduced by a third thanks to the government's measures.

Among the measures approved by the Executive are the Iberian mechanism (cap on the price of gas to produce electricity that has been applied since mid-June), the reduction of VAT to 5% in the price of electricity and gas, the cap on the 2% increase in housing rents or reduction in transport prices.

With these data, Spain ranks as the country with the second lowest inflation rate in the euro area, only behind France, which "benefits competitiveness", explain the same sources.

And the situation has completely changed. Until the summer, inflation in Spain was one of the highest in Europe, with an upward trend that began with the outbreak of the war and peaked in July at a rate of 10.8%. From that moment on, prices began to experience a more moderate rise compared to the records of a year ago until closing October at 7.3%.

Nothing to do with what has happened in neighboring countries. Average inflation in the euro area began the year at 5.1%, one point below Spain's, but it has gradually risen month by month until it reached its all-time high of 10.7% in October.

Energy price volatility widens the inflation gap among Europeans

Some, such as the Netherlands (16.8%), Belgium (13.1%) and Italy (12.8%) are in the lead with rates that double those of Spain. The fundamental reason behind this disparity is the lack of a single European market for energy, each country has its own market and has implemented different measures to alleviate prices. The experts consulted agree that inflation peaked in the summer in Spain and that it will now begin to moderate, although it will maintain high rates for the remainder of the year and even during the first half of 2023.