Inflation in Spain stays in check in June, but remains at elevated levels. Spain's 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 increase in VAT.
The rise in electricity and gas prices offset cheaper motor fuels, linked to a ceasefire 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%, a tenth of a point lower than the previous month, in line with the flash estimate published by the INE.
Electricity prices up 6% in June after reduced VAT scrapped
Electricity played a prominent role in inflation, rising 6% year on year in a June that was the second warmest on record, marked by greater use of air conditioning and fans in households.
In April and May, electricity recorded annual 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. The withdrawal of that measure is thought to have contributed to the rebound in electricity prices in June, although the Economy Ministry highlights the stability of overall inflation.
