May 24, 2024 1:21 am
Spain’s Inflation Reaches 3.2% in March as VAT Returns to 21% after Three-Year Absence

In March, Spain experienced a significant increase in inflation with a rate of 3.2% year-on-year, a four-tenths jump from the previous month. This was driven by the restoration of the normal VAT rate on electricity and an increase in gasoline prices. Despite these factors, food prices in March rose less than they did in the same month last year.

The monthly price evolution has been on an upward trend since the beginning of the year, with prices rising by 0.1% in January, 0.4% in February, and 0.8% in March. This is the largest increase since February 2023. The underlying inflation also rose by 0.5% in monthly terms.

According to provisional data released by the National Institute of Statistics, underlying inflation, which excludes fresh food and energy products, is expected to be moderated to 3.3%, a drop from 3.5% in February and the lowest rate in two years.

Services have been driving the price increases alongside certain food products like olive oil.

Experts warn of potential inflationary pressures in various sectors, particularly services as prices have been steadily increasing since the beginning of the year.

Overall, while inflation exceeded expectations in March due to several factors like tax cuts on electricity ending and VAT rate returning to its normal level, it is important for policymakers to continue monitoring this trend closely and take appropriate measures to address any potential inflationary pressures that may arise.

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