The inflation has slowed its rise to stand in June at 1.9%, the lowest level since April 2021, after standing at 3.2% in May, according to data on the advanced consumer price index (CPI) published by the National Statistics Institute (INE). Compared to May, prices increased 0.6%, well below what they did a year ago (1.9%).
According to the INE, this evolution is mainly due to the fact that this month “the rise in the prices of fuel, electricity and food and non-alcoholic beverages has been less than in June of the previous year”.
The evolution of the CPI, with a decrease in the rate of increase of 1.3 points in its interannual rate, has caused satisfaction in the Government, which highlights that “Spain It is the first country of the large economies of the euro zone that manages to reduce inflation below 2%the reference level of the European Central Bank (ECB)”. It also maintains it as one of the EU countries with the lowest inflation. A year ago, in June 2022, the CPI was on the rise, with an annual rate of 10.2 % in the stage of greatest increases due to the war in Ukraine.
Executive sources attribute this evolution to the measures adopted, such as the temporary abolition of VAT on basic food products (bread, flour, milk, cheese, eggs or fruit, vegetables, legumes, tubers and cereals) and the reduction from 10% to 5% of the tax rate on pasta and oils. All this, they point out, “has made it possible to reduce inflation by almost 9 points in less than a year, to 1.9% in June, the lowest rate since April 2021.”
Also descends the Underlying inflation, the most structural, which excludes the most volatile elements such as energy and unprocessed food, although it remains at a high level, 5.9%, after a rise of 0.5% in June compared to May. In any case, it indicates that the rise in the shopping cart continues to slow down with a drop of two tenths compared to May, according to this advanced estimate, which should be confirmed in the middle of next month.
The moderation in price escalation moves to the shopping basketwhich in May slowed down again, for the third consecutive month, with a decrease of around one point, although it remained at 12%still in double digits.
As a consequence of this evolution and the drop in fuel and electricity, the annual rate dropped to 3.2%, the lowest level for almost two years, and the harmonized indicator, which is the one used to compare with the rest of the EU countries, stood at 2.9%, which places Spain among the countries with the lowest inflation in the EU. All this allowed a downward correction of the Underlying inflationup to 6.1%.
This evolution causes the year-on-year rate to move further and further away from the 10.8% that it reached in July of last year and also that corresponding to core inflation, which reached 7.6% in February, although in this case at a rate Slower.
The increase in prices, especially in basic goods, caused families to spend almost 8% more than the previous year, according to the Family Budget Survey of the National Statistics Institute (INE). This is the highest rise recorded in 15 years.
It is precisely because of this information that the Government has decided to maintain measures such as the temporary abolition of VAT on basic products.
The rise in prices was what caused the European Central Bank (ECB) will initiate an escalation in interest rates which, in the last year, have gone from 0% to 4%.
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And that has been reflected in both the demand for credit as in variable interest mortgagessubject to euribor one year, which has not stopped increasing and has already exceeded, in daily rate, the 4% level and it could close June with an average of that level, not seen for 23 years, at the beginning of the creation of this index.
All this affects above all some 2.77 million mortgaged of the 3.7 million who have one of these variable interest loans, according to estimates by the Bank of Spain.