Despite the drop in energy prices in May, the large increase in fuel and food prices has caused inflation to rise almost half a point since April
In March, inflation reached its record close to double digits (9.8%), the highest rate in four decades, but in April the situation moderated slightly to 8.3%. A trend that has been broken in May due to the push of the shopping basket, which has caused the CPI rate to return to 8.7% in May, according to the National Statistics Institute (INE) on Monday. . Inflation in May was four tenths higher than in April, the highest since 1986.
This evolution is due to the fact that the prices of fuel and food have risen again in May, so that despite the lower price of electricity, the rate of inflation continues to rise. The INE highlights the variation in core inflation (which does not include fresh food or energy products), since it has risen five tenths from April to May to stand at 4.9%, the highest rate since October 1995.
From the Ministry of Economic Affairs they assure that this rebound is below the maximum registered in March and that the measures in response to the impact of the war (such as the fuel subsidy of 20 cents per liter) "are clearly limiting the rise in prices". In addition, sources from the ministry assure that the entry into force of the limitation of the price of gas in the wholesale market "will provide additional insurance against possible increases in energy."
For all these reasons, they maintain their forecast that inflation will gradually slow down during the second part of the year, although "without ruling out oscillations during the summer months" due to the high uncertainty derived from the global economic context.
However, the fact that the shopping basket is what is pulling the CPI is a bigger problem than when energy did it. Core inflation is a more complicated rate to lower than the general rate, which takes into account the price of fuel and energy, which are more volatile over time. "It is a problem for the Spanish economy because it is a rate that tends to perpetuate itself over time," the director of the Funcas Economic Situation, Raymond Torres, explains to this newspaper. This entails a "loss of competitiveness for Spain", warns the economist, who highlights that this is the measure that the European Central Bank (ECB) looks to adjust its interest rates and is the "main barometer of the progress of the economy" .