Inflation rate in Spain unexpectedly rises to 8.7%

INFLATION rose in May after falling in April, according to figures from the National Institute of Statistics(INE).

Advanced data showed May’s Consumer Price Index(CPI) at 8.7%- up by 0.8% on the previous month.

The rise is higher than expected with economists predicting a rate at below 8%.

The CPI figure was 9.8% in March before falling electricity and fuel prices produced a reduction in April.

The May rise, says the INE, is down to increased fuel prices at service stations, despite the 20 cents per litre discount introduced by the government on April 1.

Food and non-alcoholic drinks also showed a steep year-on-year rise but electricity tariffs fell compared to April.

If the more volatile energy and food are removed, so-called core inflation stood at 4.9% in May, up by 0.5% on April- the biggest rate since October 1995.

It suggests that rises in energy and food costs, which increased after Russia’s invasion of Ukraine, are filtering more and more into all products and services.

The Spanish government is banking on its new price cap on gas costs to produce electricity to have an instant impact on inflation as its effects will start to be seen in June bills.

The Economics Ministry predicts that inflation will average out at 6.1% for the rest of the year before dropping to 2.2% in 2023.

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