The National Institute of Statistics (INE) confirmed this Tuesday the inflation data advanced at the end of August. The annual variation rate of the CPI rose in the eighth month of the year for the second consecutive month, driven mainly by the rise in fuel prices. Although food inflation gave a slight reprieve to the Spaniards' pockets, the shopping basket continues to rise by more than 10% and the price of basic products such as oil or sugar continues to skyrocket.

The upward trend in inflation that the provisional data from the INE already indicated has been corroborated this Tuesday. The CPI rose three tenths in August to an interannual rate of 2.6%, after having experienced similar growth in July. The evolution of prices thus moves away from the 2% objective set by the European Central Bank (ECB), suspended until the end of the year. In the last month alone, consumer prices have risen 0.5% compared to July levels, thus chaining three monthly increases.

However, the acting first vice president, Nadia Calviño, has highlighted that “during the month of August, inflation remained below 3% and food inflation moderated.” “Our economic policy works because it has allowed us to lower inflation eight points in the last year in an inflationary context throughout Europe,” defended the also Minister of Economic Affairs.. Despite the increases in the last two months, inflation remains far from the figures recorded a year ago, when it reached a rate of 10.5% in August 2022, the second highest in the historical series.

The INE has attributed the rise in prices to the increase in the cost of fuels and lubricants for personal vehicles and liquid fuels.. Faced with the cheaper electricity, gasoline is 6.7% more expensive than a year ago. In the last month alone it has become more expensive by 5.7%. In fact, when excluding the price of energy and unprocessed food from the calculation, core inflation moderated slightly in August, falling one tenth to 6.1%. The indicator thus returned to the downward path that it abandoned in July after four months of moderation, after peaking at 7.6% in February.. Since then its deceleration has been slow. It is still 3.5 points above the general figure.

Food inflation also moderated in August to 10.5%, registering a slight decrease of three tenths in the interannual rate. In this way, shopping basket prices returned to the deceleration path abandoned in July, despite remaining in double digits. The INE attributes the moderation of food in August to the stability in the prices of milk, cheese and eggs compared to the increase they experienced the previous year, as well as the cheaper fruits and the fact that meat, bread and cereals became less expensive in August of this year than they did in the same month of 2022.

Oil leads the increases

Compared to July levels, in the last month the price of frozen fish, skimmed milk, butter, fresh fruit, potatoes and cocoa powder have fallen between 0.2% and 4.7% %, but increases in basic products such as meat, cheese or breakfast cereals continue. In fact, the general moderation in food inflation does not mean that prices have fallen, but rather that they are rising more slowly.. They are still 10.5% more expensive than a year ago.

Compared to August 2022, the foods that have increased the most in price are olive oil, sugar and rice, with increases of 52.5%, 42.5% and 21.6% respectively. Potatoes, pork, milk, mineral water, soft drinks and juices, dairy products, cereals and legumes and fresh vegetables have also become more expensive by between 20% and 10% in the last year.

As with core inflation, food inflation is resisting. Although it is gradually moving away from its maximum recorded in February (16.6%), the data is still well above the general index and the increases are added to the already large ones from last year. Since August 2021, food prices have increased by 25.72%. The rise in prices has been especially harsh on some products such as olive oil, which has skyrocketed by 8.7% in the last month alone.. Since March 2021, 'liquid gold' has become more expensive by 114.8%, that is, its price has more than doubled. Behind this increase, farmers point to the drought, which has ruined the crops of the last two years, in which production does not meet demand.

These accumulated increases in prices make a dent in the pockets of consumers. “Although we have a CPI well below the European average, food prices, with a rise of 10.5% in August, less than last year but skyrocketing throughout the year, and fuel prices, which have increased 7.2%, make it very difficult for households to continue supporting increases in prices of goods necessary for everyday life,” denounced the Secretary of Union Action and Employment of USO, Sara García.

With the next ECB meeting just around the corner, the spotlight remains on price behavior throughout Europe. “It is to be expected that the CPI and the underlying CPI will not move towards the 2% objective in the short term, but will converge at an intermediate point between the two,” predicts the head of Economic and Financial Analysis at Ibercaja, Santiago Martínez. Along these lines, the OECD warned last week that inflation has acquired a “generalized and persistent” nature in the eurozone, although Spain is among the least affected countries. The forecasts of the European Commission, updated this Monday, indicate that the Iberian country will be the one that closes 2023 with the lowest inflation rate among the six large European economies, around 3.6%.