Spain Inflation Eases Unexpectedly To Lowest In 22 Months
Spain's consumer price inflation eased unexpectedly in May to
the lowest level in nearly two years, mainly due to a fall in fuel
prices, flash estimates from the statistical office INE showed
The consumer price index, or CPI, climbed at a slower pace of
3.2 percent year-over-year in May after a 4.1 percent increase in
April. Meanwhile, economists had expected inflation to rise to 4.4
The latest rate was the lowest since July 2021, when prices had
risen 2.9 percent.
This development is mainly due to the decrease in fuel prices,
which increased in May of the previous year, the agency said.
The slowdown in inflation was also influenced by lower prices of
food and non-alcoholic beverages compared to last year.
Excluding non-processed food and energy prices, core inflation
eased for the third successive month to 6.1 percent from 6.6
percent in April.
On a monthly basis, overall consumer prices edged down 0.1
percent in May, reversing a 0.6 percent increase in the previous
month. Economists had forecast a 0.1 percent increase.
ING economist Wouter Thierie said service sector inflation
remains stubbornly high for now, though it is expected to start
cooling structurally for the first time, especially after the
"We forecast an average inflation rate of 3.9 percent for all of
2023," Thirrie said.
"The expected slowdown in inflation can be attributed to lower
energy prices and cooling food inflation, which will also dampen
the pass-through effect of these components to the prices of other
goods and services."
EU harmonized inflation moderated to 2.9 percent in May from 3.8
percent a month ago. The expected increase was 3.5 percent.
Month-on-month, the HICP dropped 0.2 percent, while prices were
forecast to rise by 0.2 percent.
"Inflation in the euro-zone as a whole should eventually follow
a similar path, but we would not jump to any conclusions about the
rate for May, data for which are due on Thursday," Andrew
Kenningham, a chief economist at Capital Economics, said.
Separate official data showed that Spanish retail sales growth
eased to 5.5 percent in April from 9.9 percent in March.
Sales of non-food products grew by 14.3 percent annually in
April, and those of food goods rose by 1.6 percent. Meanwhile,
sales at service stations showed a decline of 4.8 percent.
Compared to the previous month, retail sales advanced 0.9
percent in April versus a 0.7 percent gain in the prior month.
In a separate report, ING economist Thierie said tourism will be
a key driver of growth in Spain this year with household
consumption declining and expected interest rate hikes dampening
"Our forecast is for growth of 1.9 percent for Spain, surpassing
the eurozone's expected growth rate of 0.5 percent," the economist
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