Spain is no longer the large EU economy with the least inflation: prices are already growing above 2.9% in the eurozone
In October, Spain lost its leadership as the large economy of the European Union with the least inflation. Prices grew for the first time in more than a year in the Iberian country above the eurozone average, which fell below 3%, according to data released this Friday by Eurostat. Faced with the slowdown in prices in the eurozone, the CPI grew slightly by two tenths to 3.5% in Spain, which remains among the countries with the greatest increases in food prices.
The European statistical office confirmed this Friday that the average rate of change of the CPI in the eurozone was reduced in October by almost one and a half points to an interannual rate of 2.9%, as provisionally announced at the end of the month. In this way, inflation exceeded the 3% threshold for the first time since July 2021, already immersed in a particular upward path.. The behavior of prices in the eurozone – and in the EU as a whole, where the CPI fell from 4.9% in September to 3.6% in October – contrasts with the stagnation of inflation in Spain, whose CPI stood in the tenth month of the year above the eurozone average for the first time since August 2022.
The abrupt slowdown in prices in the eurozone – which did not fall, but rather became more expensive at a slower pace – is largely explained by the statistical effect. When measuring the variation of the CPI in year-on-year terms, the comparison with October 2022 is favorable, since at that time inflation reached 10.6%, thus reaching the peak of its escalation.. The same thing happened, for example, in Germany and Italy, whose CPI recorded an annual rate of 11.6% and 12.6% in the tenth month of 2022.. A year later, the German index has fallen to 3% and the Italian one to 1.8%, with significant falls compared to the rates of 4.3% and 5.6% recorded in September.
The moderation of inflation in Germany and Italy has caused both countries to overthrow Spain, which had been the large EU economy with the lowest price increases for eleven months.. Unlike the consecutive drops in the CPI recorded in the eurozone average over the last half year, in Spain inflation has been rising for four months, after falling to 1.6% in June. And the Iberian country also registered the peak of the upward curve before all the partners of the single currency, in July 2022, hence the difference in trends.
Among the four large economies of the EU, inflation in Spain remains only below the French figure, which moderated to 4.5% in October. Among the twenty-seven community partners, Belgium, the Netherlands and Denmark were the countries that recorded the lowest inflation rates in October, even entering negative territory (-1.7%, -1% and -0.4% respectively).. On the other hand, the most intense price increases were recorded in Hungary, the Czech Republic and Romania, with rates above 8%.
In line for food
Behind the slowdown in prices in the eurozone as a whole in October is especially the moderation in the price of energy, which is currently 11.2% cheaper than a year ago, when its inflation rate reached 41.5 %, still under pressure from the consequences of the war in Ukraine. When excluding the impact of energy from the inflation calculation, the interannual rate of the CPI in October stood at 4.9%, compared to 5.5% the previous month; while also leaving out the impact of the price of food, alcohol and tobacco, the underlying inflation rate remained at 4.2%, three tenths less.
At the opposite extreme to energy, the products that continue to register the highest increase continue to be food and non-alcoholic beverages, whose interannual variation in the CPI reaches an average of 7.5% among the members of the single currency. In Spain, according to harmonized Eurostat data, food inflation reaches 9.4%. Despite having fallen almost one point compared to September's 10.5%, the Spanish figure is still the second highest in the entire EU, only behind Greece's 10.4%.
The fall in the general index registered in October in the eurozone as a whole brings inflation closer to the 2% objective of the European Central Bank (ECB). After just over a year of tightening monetary policy, the institution chaired by Christine Lagarde agreed at the end of October to take its first pause after having agreed to ten consecutive increases that have placed interest rates in the eurozone at an unprecedented level of 4. 5%.