Prices do not stop giving truce. Inflation has risen one tenth to 3.3% in April due to the base effect due to the better performance of gas and food prices last year, according to preliminary data made public this Monday by the National Institute of Statistics (INE). ).

The good news comes from underlying inflation, which excludes unprocessed food and energy itself from its calculation, and which continues to decline, as it drops four tenths and stands at 2.9%. It is the first time in almost two years that core inflation is below general inflation.

In this sense, the INE highlights that the group of foods and non-alcoholic beverages increased by 4.3%, one point below that of last month. This decrease was due, for the most part, to the drop in the prices of legumes and vegetables and other food products, which increased in the same month of 2023. The rise in meat prices, lower than in March 2023, also had an influence. 2023.

Regarding general inflation, the increase in electricity prices stands out, compared to the decrease in March of last year and its impact on household prices. Among other reasons, due to the withdrawal of the aid implemented due to the pandemic that caused the VAT on electricity to be restored to 10%, the rate prior to June 2021.

The rise in the prices of tourist packages, which increased more than in March 2023, and Transport, with an increase of half a point, to 2.9%, have also had a strong impact on inflation. This increase was a consequence of the increase in fuel and lubricant prices, which decreased in the same month of 2023.

The general CPI already rose to 3.2% in March from inflation from 2.8% in February due to the withdrawal of one of the most important measures of the Government of collation against the price crisis that began after the pandemic and with the Russian invasion of Ukraine: the reestablishment of VAT on electricity prior to June 2021. In addition, the INE highlighted the effect of the increase in fuel prices due to the Easter holidays.

Inflation began with a rebound of 3.4% in January (compared to the same month in 2023). At that time, due to the beginning of the partial withdrawal of shock measures to meet the 3% deficit objective, after the return of fiscal rules to the EU. Then, the VAT on electricity went from 5% to 10%, where it remained in February.

This ‘sticky’ inflation that does not go below 3% gives wings to the European Central Bank (ECB) and its stubbornness to keep interest rates rising, despite the fact that the monetary institution recognizes the damage of its policy to families and the companies. We must wait until June for the beginning of the end of monetary austerity to begin, with a first cut in interest rates.


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