Saturday, February 24

Inflation moderated to 8.9% in September with special impact of transport discounts

Inflation moderated to 8.9% in September, with a special impact on transport bonuses, such as the discounts on Renfe that the Government approved in August and that came into force in September. The worst news is that food prices have skyrocketed, totally infected by the escalation of energy and fertilizers for months.

Inflation, product by product: this is how electricity, supermarkets, beer or gasoline have risen

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The National Institute of Statistics (INE) confirms this Friday that the annual Consumer Price Index (CPI) fell 1.6 points since August, relaxed 1 tenth more than expected, due to the falls in fuels and also in the electricity. Thus, it fell below two digits after having chained three consecutive months above 10%.

Inflation fell back to 7 tenths of a blow in the monthly rate. “The reduction in inflation highlights the positive impact of the measures put in place to cushion the rise in prices, especially related to transport,” sources from the Ministry of Economic Affairs defend.

Electricity and fuel fell, thanks to the cap on gas or the tax cuts on the bill, to which the new measures will be added from now on. Setbacks that offered some encouragement to the economy, suffocated in an energy crisis that has turned into a crisis of general inflation that is damaging growth and, above all, the poorest families, who dedicate a greater part of their income precisely to energy and food.

Precisely, in September the supermarket basket rose very strongly. The food rate advanced six tenths, to 14.4%, the highest since the beginning of the series, in January 1994. Particularly noteworthy is the increase in the price of legumes and vegetables, meat, and milk, cheese and eggs.

For its part, the transport group cut its year-on-year rate by more than two points, to 9.4%, due to the lower cost of fuel and the various Renfe services, buses…

Being cold in winter is at stake and the possibility of having a healthy diet is threatened by the rise in prices, even the risk of more extreme situations becoming generalized, which is why the CPI data for September, both due to its moderation in the interannual rate (the second largest drop since April of this year) and the monthly rate (the largest drop since July 2021) represents a positive trend, which forecasts point to will continue.

The general CPI in September was 1.9 points below the ceiling of this price crisis due to the Russian invasion of Ukraine, 10.8% in July, its highest level since September 1984, compared to the same month of the previous year. With this moderation of 1.6 points, inflation adds two consecutive months of declines in its year-on-year rate after falling three tenths in August, to 10.5%.

Downward trend

The fall in fuel and other raw materials, the decongestion of global supply chains, the end of the high tourist season, the increase in ECB interest rates and the containment of wages are positive factors for prices in the coming months. The crisis originated in energy (gas, fuel, electricity…) in 2021, was exacerbated by the Russian invasion of Ukraine and has already spread to the entire shopping basket, with special incidence, yes, in feeding.

In monthly terms (September compared to August), the CPI registered a decrease of 7 tenths, its biggest drop since July 2021, when it fell eight tenths.

And even better news, if possible, is that core inflation (the CPI calculation that excludes energy and unprocessed food, and which is considered less volatile) fell two tenths in September, to 6.2%, standing almost three points below the general CPI.

It is the first drop registered by core inflation after fourteen consecutive months of increases, which led this index to reach its highest level last month since January 1993.

Core inflation offers a more structural view of prices. Its increase in August to 6.4%, after 5.5% year-on-year in July, indicated the persistence of price increases due to a general rise in company costs, in all sectors of activity. The first and most serious damage is the loss of purchasing power of families, who see how their salaries or their incomes give for less each month. Especially in the case of the poorest.