The interannual rate of inflation in the economy has moderated to 3.2% in May, which means that the consumer prices registered in this month in Spain have been 3.2% higher than those that were in the country in May 2022, a lower difference than last month (4.1%) and which confirms the downward trend -with steps- of this indicator.

However, even if this year-on-year distance is narrowing, underlying inflation, the main cause for concern, since it reflects the upward trend in prices that is not due to specific or speculative movements, excluding the evolution of energy products and fresh food, stood at 6.1% above the level of the previous year, which represents a decrease of five tenths compared to last month (then it was 6.6%), but it is still a very high increase that will force the European Central Bank (ECB) to continue increasing interest rates.

As explained by the National Institute of Statistics (INE) when publishing these data, “this evolution is due, mainly, to the decrease in fuel prices, which increased in May of the previous year. It also influences, although to a lesser extent, that the rise in the prices of food and non-alcoholic beverages has been less than in May 2022”.

In monthly terms, prices fell 0.1% in May compared to April, the first decline since November, while core inflation rose 0.2%.

Last month, year-on-year inflation was 4.1% and the monthly increase was 0.6%. The Funcas experts had predicted that the general index would drop to 3.5% in May, with which the slowdown has been even higher, and that the monthly rose by 0.3%, while it has finally fallen.

Looking ahead to the coming months, inflation will drop soon and pick up again at the end of the year, which will be positive for the Government now that it has decided to bring forward the call for general elections to July 23. Specifically, Funcas forecasts that inflation will reach its minimum levels in the months of June and July, when it will reach 2.2% and 2.5%, while in the second half of the year it will recover its upward trend and end the year in 5.2% in December, one of the highest levels of the year. Holding the elections at the end of the year, as planned, would have led voters to vote in a scenario of rising inflation.

It must be taken into account, in any case, that inflation is cumulative and that the rise in prices that has been recorded in the last twelve months (3.2%) is added to that of the previous calendar year (8, 7%) and that of 2021 (2.7%), with which, since 2020, prices in Spain have suffered an unprecedented increase in recent history.

With this May record, which the INE will have to confirm in mid-June, average year-to-year inflation so far this year stands at 4.5%, which is the average price rise compared to last year in the first five months of the year.

Although the deceleration of the interannual rate of inflation is positive, the experts had already pointed out that it would be important this year to monitor the monthly rate, since on January 1 the composition of the CPI changed and, therefore, the comparisons with the previous year would remain distorted, being the monthly the one that gives the clue of how the prices are behaving

Nadia Calviño, First Vice President and Minister of Economy, celebrated today that “prices fell again in May.” “Inflation in Spain is already around 3%. The data for May confirm the effectiveness of the Government’s measures, the moderation of food prices, the fall in fuel prices and position our country as one of the those with the lowest inflation in the European Union”, he highlighted.

According to the criteria of The Trust Project