Inflation shoots up to 10.2% in June, maximum of 37 years

Fruits for sale in a supermarket. / colpisa

The rise in fuel and food prices is behind the rise in prices. The underlying rate rises six tenths to 5.5%, the highest since August 1993

Clara Dawn

Inflation continues to be the indicator that is giving the Spanish government the biggest headaches. After ending May at 8.7%, four tenths above April, the CPI closed June at 10.2%, one and a half points above May and the highest rate since April 1985. The annual rate of the underlying rises to 5.5%, six tenths of a rise compared to the previous month and the highest since August 1993.

The rise in the prices of fuel, food and non-alcoholic beverages, as well as hotels, cafes and restaurants, have had a notable influence on the escalation.

The advance data has exceeded all market forecasts and places the economy and the Executive in a somewhat helpless watch as the measures undertaken so far to curb the rise in prices have not fully impacted the indicator.

Experts warn that it is possible that the data has not yet peaked, especially due to the evolution of energy prices.

From the Government they calculate that the set of measures approved with the gas cap and the anti-crisis plan (both the existing ones that have been extended until the end of the year and the new ones incorporated) will contain the rise in prices by 3.5 points this year. Data that would not correspond to what the INE collects month by month in the so-called CPI at constant prices, which precisely reflects this behavior of the indicator in the absence of measures.

Inflation has been, in fact, one of the recent battle horses between Economy and the statistical institute, which has ended with the recent resignation of Juan Manuel Rodríguez Poo at the head of the institution.

It has been months since the Executive censured that the INE did not compute in its calculations of the indicator the free rate of electricity (the one that customers freely agree with the companies), including only the regulated rate directly linked to wholesale prices, which would impact the rise in the calculation of the CPI. The INE has been working for a long time to be more precise in this regard, but alleges that it is enormously complex to obtain this data from the electricity companies.

Whatever the appropriate calculation, the truth is that prices continue to skyrocket, having a full impact on the shopping basket and, once again, on family consumption, one of the pillars of economic recovery.

In this environment, central banks have set themselves the goal of putting an end to inflation that, only a few months ago, they continued to describe as "temporary". The passage of time has shown that they were wrong, forcing the main monetary institutions to speed up the withdrawal of stimuli and prioritize the fight against rising prices, even if that means generating an economic recession.

The president of the European Central Bank (ECB), Christine Lagarde, assured this week that the institution is willing to go "as far as necessary" to guarantee that inflation stabilizes at 2% in the medium term in the region. Along this path, Lagarde is confident that the tool to combat the fragmentation of the euro zone markets will allow the European bank to raise interest rates "as much as necessary"

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