this Cumulative increase in the Harmonized Index of Consumer Prices (HICP) excluding energy and food in the last three years -July 2019 to July 2022- It was 6% and 5.3% in the euro area and Spain.taking into account the increase in the three years before the pandemic, compared with increases of around 3% in both areas, respectively.
This is reflected in the ‘The latest evolution of core inflation in the euro area and in Spain’ published by the Bank of Spain on Monday, where it is pointed out that the pressures on core inflation are concentrated in the euro area. and Spain, reflecting the continued rise in production costs and some factors related to the pandemic.
in the eurozone, most Core inflation It has shown a distinct upward profile and has reached levels unprecedented in the history of the Economic and Monetary Union. (EMU) remained at 4% in July 2022, after breaking maximum records in November 2021, when it exceeded 2.5%.
All nineteen Member States exceeded the 3% core inflation rate; In some cases, such as the Baltic states or Slovakia, it exceeds 8%. Similarly, core inflation in Spain has increased sharply since the middle of last year and stood at 4.6% in July 2022.
More emphasis on entertainment, restaurants and tourism in Spain
In Spain, the contribution of leisure, restaurant and tourism to consumer price increases last year was significantly greater than that observed in the euro area, due to both higher price increases and greater weight for these items. consumption basket.
In its place, The Bank of Spain states that the contribution of transport-related items is slightly lower than that observed in the euro area.
Specifically, in Spain, prices for entertainment, restaurants and tourism show a more intense relative increase compared to 7% of the ‘Equipment and housing care’ price sub-index last year – 8% in July. 5.6% of ‘Transportation’.
Considering the cumulative increase in prices in the last three years, the most intense increase is seen in the ‘Housing’ sub-index (9%), while the annual increase in the ‘Entertainment, restaurant and tourism’ index accumulates. 7.9%.
For the Bank of Spain, ‘Entertainment, restaurants and tourism’General inflation in Spain, which posted 1.6 percentage points (pp) of inflation in July 2022, compared to a point in the EMU. “This item represents 20% of consumer spending in Spain, compared to 16% in EPB,” the agency explains.
Secondly, the contribution of ‘Transport’ to overall inflation is slightly lower in Spain (0.4 percentage points) than in the euro area as a whole (0.6 percentage points) or in France and Italy (0.9 percentage points). This lower contribution reflects not only a slightly lower growth in prices, but also the lower weight of this component – 7.6% compared to 10.2% in EMU in Spain.
In the case of Germany, the Bank of Spain explains that the new subsidized public transport subscription has resulted in a 60% annual reduction in combined passenger transport prices. Therefore, the contribution of the ‘Transportation’ sub-index to general inflation in this country in June and July was almost zero compared to 0.8 points in May.
Factors behind the increase in core inflation
Some notable factors cited by the Bank of Spain behind the increase in core inflation are: cost of raw materials, expenditure on housing, bottlenecks, reopening, and the cyclicality of prices relative to the target of expenditure.
According to the Bank of Spain, the persistence of these increases over time in the most stable components of inflation is uncertain and considers that a relatively limited response of wages and operating margins relative to current inflationary pressures will be essential to avoid the emergence of significant inflationary pressure. runoff effects and with it the prolongation of the current inflationary scenario.