2023-07-06 04:13:30
Party in the Government for the latest inflation data. Last week, the Statistics National Institute (INE) published that the Consumer price index (CPI) increased 0.6% in June in relation to the previous month and placed its interannual rate at 1.9%.
The President of the Executive, Pedro Sanchez He was full of data less than that of May, which he described as a “country success”. That inflation continues to rise by 1.9% “is a success for the country, for Spanish society, for families, for companies, for industries, for workers and workers, and, with them, for the Government that is applying an economic policy that is paying off”, celebrated Sánchez.
It is still striking that when inflation escalated to levels never seen last year, Sánchez assured that “inflation was the sole responsibility of Putin and his illegal war in Ukraine“. However, now that the price rise has eased, he does not hesitate to take credit.
It must be made clear that, although the CPI closed June with lower data than May, the problem continues: we are still facing a rise. In other words, prices are still more expensive than last month and what is truly harmful is that Accumulated inflation in the last two years is around 14%which is the purchasing power that citizens have lost during that time.
The mirage of the step effect
Another detail that dismantles the triumphalism of the Government regarding the evolution of prices is the evident step effect of the June data. Just in June last year inflation was rising a historic 10.2%, therefore, it is normal that this indicator now rises less.
In this sense, like the July data will come out of the comparison with the same month of the previous year (the historical maximum of 10.8%) it would not be strange either that the result would once more be favorable to the story of the Government standing even below the latter 1.9%.
Related
However, Funcas’ prognosis is not so optimistic for Sánchez. The Savings Banks Foundation (Funcas) predicts that the interannual rate of Inflation will once once more be above June until July (2.3%) and that it will end the year at 5%, with an average annual rate of 3.9%. Therefore, the moderations in the rises of prices would already have come to an end this year and the rises would return in a year where the prices would be going through a real roller coaster that does not stop systematically eroding the wealth of the country’s citizens. The following table shows all Funcas forecasts for the CPI.
Another black point is the data of the underlying inflation, a variable that is completely entrenched in all areas of the Spanish economy and that it has been above the general CPI since the end of 2022.
In June, the core (which does not take into account the volatile effect of energy or unprocessed food) stood at 5.9%, a level similar to that of previous months, which confirms that it will be very difficult to reduce. According to the Funcas chart, processed foods will end the year 2023 with an average rise of a whopping 13% and the core at 6.4%, so there is little room for celebration.
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