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Tuesday, March 28, 2023

Inflation in Spain surprises and rises for the first time in six months to 5.8% per year

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The INE said it changed the calculation methodology for electricity and gas prices in January.

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Core inflation, which strips out volatile fresh food and energy prices, was 7.5% year-on-year, up from the 7.0% recorded in December, according to INE data.

In Spain, year-on-year inflation harmonized with the European Union was 5.8%, above the 5.5% in December and the expectations of 4.7% of analysts consulted by Reuters.

The general price index had fallen rapidly in the second half of 2022, from a peak of 10.8% in July to 5.7% in December, the slowest in the euro zone.

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The Spanish data comes at a time when the European Central Bank has practically committed to raising its official interest rate by half a percentage point this week.up to 2.5%, but policy makers are expressing different preferences for March depending on their inflation outlook.

Government measures to alleviate inflation

The government expects prices to drop in the coming months, thanks above all to the abolition of VAT on basic food items decided in December to curb its rise in prices.

This measure is part of a new aid package of 10,000 million euros ($10,900), which brings to 50,000 million euros the total cost of the measures adopted by the government to help citizens face the high inflation.

Although the Spanish inflation rate is high, it is not as high as that of many neighbors in the Eurozone, where it stood at an average of 9.2% in December.

Source: Ambito

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