Gasoline subsidies and lower electricity rates reduce the CPI rate, although it remains the highest since 1983
After a month of March with prices setting their record since the 1980s, in April the situation has improved, although the CPI still registers levels not seen for decades. The data published this Thursday by the INE reveal that April inflation stood at 8.4%, 1.4 points less than the previous month and the highest rate since 1986.
This reduction is mainly due to electricity and fuel, which have lowered their price in the last month due to the discount of 20 cents per liter of gasoline at service stations and the drop in the price of energy from its record levels. February and March. But it is not enough and they continue to be the two elements that most pull the IPC up, although they are not the only ones since the entire shopping basket continues to rise in price compared to April a year ago.
“It is a significant reduction that breaks the upward trend of recent months, in which the first effects of the measures adopted by the Government to mitigate the economic effects of the war in Ukraine can be seen, to reduce the cost of energy for families”, say government sources, who acknowledge that the “slowdown” in electricity prices has also contributed to this reduction.
In addition, they expect inflation to continue its decline in the coming months thanks to the limitation of gas prices that is being negotiated with Brussels, which will allow a “significant” reduction in the price of electricity. “The drop in the electricity bill of homes and companies will occur as soon as possible,” they argue.
In monthly rate (April over March), inflation fell by 0.1%, its first fall after two months of increases, 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 lack of raw materials.
Underlying: 4.4%
That not only does the rise in energy push the CPI upwards, as evidenced by the core inflation rate (which does not take energy or fresh food into account), which rose one point in April to stand at 4.4%, the highest since December 1995.
A problem for the Spanish economy since it is a rate that “tends to perpetuate itself over time” and is higher than the European average, which means “loss of competitiveness for Spain”, explains to this newspaper the director of the Economic Situation of Funcas, Raymond Torres, who assures that subjacent inflation is the “main barometer of the progress of the 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, stood at 8.3% in annual rate, one and a half points below that of March and only one tenth below the overall CPI.
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