Prices soar up to 9.8% in March, the biggest rise since 1985

Prices soar up to 9.8% in March, the biggest rise since 1985

A gas station. / Eph

Electricity has become more expensive by 61% since a year ago, while fuels have increased by almost 40%, which caused the highest rise in inflation for four decades

Edurne Martinez

Prices are out of control and the March CPI data confirmed by the INE on Wednesday corroborates this. Inflation ended March at 9.8%, the same rate that the General Institute of Statistics had advanced fifteen days ago with the first estimates, and which represents the highest rate since May 1985. This large rise is mainly due to to the increase in the cost of electricity and fuel, but they are not the only elements that are rising: the entire shopping basket rises in price compared to March a year ago.

It's the perfect storm for inflation to skyrocket. The war in Ukraine has made energy products even more expensive, which had already been setting record rates since before the conflict began, and tensions in distribution due to the carriers' strike last month that made products in the shopping basket more expensive few those days on the supermarket shelves, like oil or milk.

Undoubtedly, electricity has been the element that has triggered the rate this month. The electricity bill has risen 61% compared to a year ago, according to INE data, which reveal that in the case of gasoline the increase has been 38.8%. But the rise in fresh food also stands out, 35.8% compared to March last year.

More in detail, in the last year heating, lighting and water have become more expensive by 68%, oils by 32% and transport by 19% due to the higher cost of fuel. Eggs and milk also exceeded double digits, both up 11% compared to a year ago, as well as sheepmeat and fish (fresh and frozen), with rises of 10% in both cases.

"It is likely that this March rate marks the peak of the year," Raymond Torres, director of Funcas' International Situation, assures this newspaper. The expert considers that the "relative stabilization of the price of oil in international markets" added to the measure announced by the Government of capping the price of gas that goes into electricity generation, will cause the CPI to remain high in the coming months, but do not reach double digits. "Inflation for the year as a whole will be close to 7%," Torres calculates.

Electricity, 18% more expensive in just one month

In monthly rate (March over February), inflation rises 3%, its highest rise since 2002, with the impact of the war as a backdrop, which has led to the rise in energy prices and problems in supply chains due to the lack of raw materials. This is explained by the Ministry of Economic Affairs, who say that 73% of this rise in inflation is due to the impact of the Russian invasion. But they consider that the Shock Plan approved by the Government will succeed in "reversing this upward trend, curbing the increase in costs for companies and families and in the short term beginning to reduce inflation to more moderate levels."

With the figures on the table, from February to March, what increased the most in price was energy (18.2%), fuels (13.4%), heating and lighting (18.6%) and, in the shopping basket, oil (4.4%) and eggs (4.3%).

Core inflation: 3.4%

That not only does the rise in energy pull the rise in the CPI upwards, which is shown by the core inflation rate (which does not take energy or fresh products into account), which rose four tenths in March to stand at 3.4%, the highest since 2008.

Raymond Torres explains that the underlying is the "main barometer of the progress of the economy" because it tends to perpetuate itself over time and is somewhat higher than the European average, which "results in a loss of competitiveness for the Spanish economy." The economist also warns that this is the measure that the European Central Bank (ECB) looks to adjust its interest rates.

For its part, the IPCA, which provides a common measure of inflation to be able to make international comparisons, also stood at 9.8% in annual rate, more than two points above that of February.

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