Spanish Inflation Accelerates in March
Spanish inflation increased in March, driven mainly by higher energy costs, according to preliminary official data released on Wednesday. The national statistics office reported that consumer prices rose by 3.2 percent on an annual basis, up from 2.8 percent in February.
The rise in inflation was attributed to an increase in the price of electricity and fuel, which offset slower growth in food and non-alcoholic drink prices. The inflation rate had hit a record 10.8 percent in July 2022, the highest level since 1985, but has since eased.
Prime Minister Pedro Sanchez had implemented measures in 2022 to assist households in dealing with the higher inflation, such as offering free commuter rail travel and reducing the value-added tax on energy bills and certain food items. However, these measures are set to be phased out this year.
Economists predict that Spanish inflation is likely to continue increasing in the coming months due to higher value-added tax rates on energy and foods, as well as higher prices from service firms. The Bank of Spain foresees inflation easing to 2.7 percent this year from 3.4 percent in 2023, with a further decline to 1.9 percent by 2025.
The European Central Bank has raised interest rates in an effort to bring eurozone inflation back to its two-percent target.
