Spain's Inflation Ends 2023 on a Positive Note
Madrid - Spain received encouraging economic news to kick off 2023, as the country's inflation rate exhibited further signs of moderation in December. According to data released on Friday by the National Statistics Institute (INE), consumer prices rose by 3.1% year-over-year last month, a decrease of 0.1 percentage points from November.
This represents the continuation of a downward trend in inflation observed in recent months, following the surges witnessed throughout much of 2022. At the peak of Spain's inflation crisis last summer, consumer prices had surged as high as 10.8% annually.
The December deceleration was driven, in part, by a reduction in food and beverage inflation to 7.3% annually, compared to 9% in November. Meanwhile, alcohol and tobacco prices increased by just 3.4%, as opposed to the 7.1% seen the previous month, primarily due to a base effect related to cigarette prices after significant increases the preceding year.
Excluding volatile energy costs and seasonal factors, Spain's underlying "core" inflation rate plummeted by 0.7 points month-over-month, settling at 3.8% annually its lowest level since March 2022.
While the elevated energy prices resulting from the Ukraine war initially triggered Spain's inflation spike, the government has implemented measures to cushion the impact on consumers, such as VAT cuts on essentials and reductions in fuel taxes.
With inflation seemingly reaching its peak, 2023 has begun on a positive note. However, policymakers will be diligently monitoring price dynamics, aiming to maintain Spain's inflation rate close to the European Central Bank's 2% target in the coming months.