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Inflation eased to 7.3% in October due to decline in electricity and gas


According to data confirmed by the INE (National Statistics Institute) this Tuesday, the CPI (Consumer Price Index) fell for the third month in a row in October, to 7.3% compared to the same month last year. “Spain grows, creates jobs and lowers inflation,” he defends from the government.

The ECB has called for monetary and fiscal measures to counter its “aggressive” interest rate hikes

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If fuel took a breather in September, last month’s decline in gas and electricity was largely responsible for the 1.6 points drop in CPI. Mainly, according to the Executive Board, there is no room left to store more gas due to the effect of the “Iberian mechanism” and the lack of cooling. However, the indicator rose at a monthly rate due to a resurgence in fuel.

The year-on-year CPI has also eased due to other shock measures by the government to mitigate inflationary damage. “Emphasis on reducing transport costs or reducing taxes on gas and electricity bills”, emphasized the Ministry of Economic Affairs itself. After the end of the first full and unrestricted tourism season since 2019, the slowdown in economic activity in general has also had an impact.

This restraint practically confirms that the inflation of 10.8% in July is the ceiling of this energy crisis which was exacerbated by the Russian invasion of Ukraine and has been transferred to all prices. It also places Spain as the second largest economy in the euro area where the CPI has relaxed the most, behind only France.

From now on, the base effect will make it more difficult to keep up energy prices, the biggest contributor to unbridled general CPI. They have already grown strongly at the end of last year, so comparisons in the coming years are already made with respect to very high levels.

Most worrying about October’s inflation figures is that the core CPI, which excludes energy and fresh food, settled at 6.2%. This index gives a more structural view of price growth. And at such high levels it reflects aggregate inflation in a basket of goods and services and assumes continued inflation, even if fuel or gas declines, in the face of 2023.

Thus, it is particularly worrisome that food as a whole is skyrocketing. Shopping in supermarkets is a suffocating exercise in our country. And with wages rising well below inflation, the decline in household purchasing power is the most severe in four decades.

Source: eldiario.es/

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