Inflation consolidates its upward trend: it rebounds to 3.5% in September

View of a high voltage tower. (Jesús Hellín – Europa Press).

The September Consumer Price Index released this Thursday by the INE confirms a rise in inflation to 3.5% year-on-year, nine tenths more than the figure set in August (2.6%) and more than one and a half points above the lowest figure of the year, 1.9% in June. Inflation thus confirms an upward trend in its growth rate and returns to the values ​​it had in spring.

As explained by the statistical institute, the rebound in the ninth month of the year is due to the increase in electricity prices, which intensifies the base effect compared to the drop in its price in the same month of 2022. Secondly, fuels continue to push upwards, as already happened in August, compared to the decrease they registered in September of last year.

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On the other hand, core inflation, which reports the general index without unprocessed food or energy products, slowed down three tenths in September, to 5.8%, the lowest rate since June 2022. However, when it stood at Above 5.5% allows the reductions in VAT on food to be maintained until the end of the year if the figure known today is confirmed in October.

The Ministry of Economic Affairs emphasizes that Spain continues to be among the EU countries “with the lowest inflation and highest growth in the euro zone.” They also maintain that the economic policy measures adopted by the Government “are favoring the competitiveness of Spanish companies, the gain in market share and the increase in the purchasing power of salaries.”

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Regarding the harmonized CPI (HICP), the indicator that provides a common measure of inflation to make comparisons with the European Union, it rose eight tenths in September, up to 3.2%. Eurostat has not yet published the data for September, so it is not possible to compare where Spain is with this increase. However, it is true that in August our country was the second with the lowest inflation, only behind Denmark (2.3%) and equal to Belgium (2.4%).

Both the Spanish banking supervisor and the community executive estimate that Spain will close 2023 with an interannual inflation of 3.6%, although they differ on the evolution of inflation for 2024. The Bank of Spain advances that it will increase to 4.3%, while that the European Commission foresees lower inflation than this year, of 2.9%.

According to the Bank of Spain, prices will not grow below the 2% recommended by the ECB until 2025, a year for which it anticipates an average inflation of 1.8%. Its main reason for raising the 2023 inflation forecast is the rise in crude oil prices in international markets during the summer, which has caused a rise in gasoline and diesel.

As for 2024, inflation will be higher than expected due to an increase in the price of energy perceived in energy prices in the futures markets and due to the foreseeable disappearance of the Government’s measures to mitigate the impact of inflation. Some of these are the reduction of VAT on food, electricity and subsidies for public transport.

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