Inflation in Spain eases in June, but remains at high levels. The National Statistics Institute (INE) confirmed on Wednesday that the consumer price index (CPI) stood at 3.2% year-on-year, well above the European Central Bank's 2% target, despite the VAT increase.
The rise in electricity and gas prices offset cheaper motor fuels, linked to a truce in the Middle East that has already collapsed. Core inflation, which excludes energy and unprocessed food because of their volatility, came in at 2.9%, one tenth of a point lower than the previous month, in line with the flash estimate published by INE.
Electricity rises 6% in June after reduced VAT is scrapped
Electricity was a key driver of inflation, rising 6% year-on-year in June, the second warmest on record, marked by greater use of air conditioning and fans in households.
In April and May, electricity posted year-on-year falls of 5.5% and 4.3% respectively, which made it possible to maintain the VAT cut introduced by the government to cushion the economic impact of the war. Scrapping this measure is thought to have contributed to the rebound in electricity prices in June, although the Economy Ministry points to the stability of headline inflation.
