Inflation slowed sharply in March in Spain to 3.3% annually, due to falling electricity and fuel prices, according to a provisional estimate published on Thursday.
This figure, which is yet to be confirmed, is “more than two and a half points” lower than that of February (6%), underlines the Spanish National Statistics Institute (INE) in a press release. We have to go back to August 2021, that is, 19 months ago, to find an equivalent level of inflation.
According to the INE, this sharp drop is explained by the evolution of electricity and fuel prices, which fell in March when they had risen sharply in the same month of 2022, just after the outbreak of the war in Ukraine.
The harmonized consumer price index (IPCA), which allows comparison with other countries in the euro zone, also slowed down sharply (-3 points), to 3.1%.
Core inflation, which does not take energy prices into account and is seasonally adjusted, remained high, on the contrary, at 7.5% annual, 0.1 point less than in February (7.6%).
VAT abolition
The sharp slowdown in price increases in March, which occurs after two months of slight acceleration, is good news for the President of the Socialist Government, Pedro Sánchez, ahead of the legislative elections scheduled for the end of 2023.
In fact, the Spanish government has multiplied budgetary measures over the last year to support the purchasing power of households, strongly affected by inflation, which rose to 8.4% on average last year.
The executive thus announced at the end of December the abolition of VAT on basic necessities, as part of an aid package of 10,000 million euros aimed at curbing the rise in food prices.
This measure raised to almost 50,000 million euros the total amount of the measures adopted by the Government of Sánchez for more than a year to help the Spanish.
With this figure of 3.3% in March, Spain is in a much more comfortable situation than most of its neighbors in the euro area, where inflation -slightly downward- reached 8.5% year-on-year in February.
In its latest forecasts published in mid-March, the European Central Bank said it expects inflation to decline gradually this year, which should reach 5.3% by the end of the year.
Source: BFM TV
