Inflation eased to 3.3% in March, a drop that mirrors the 2.5 percentage point decline seen in February (6%) and the rate reported by the National Statistics Institute at the end of March. The cooling in inflation was driven mainly by softer foreign exchange prices and lower costs in electricity, fuels, and gas. Food also contributed, rising from February by 1.1% but still reducing its annual pace by a tenth to 16.5%, after February’s record 16.6%. On the same note, core inflation, which strips out the more volatile food and energy categories, slipped to 7.5% in March.
Still, it is important to remember that the current price comparison is anchored to an extraordinary March 2022, the month after the Ukraine war began, when monthly prices surged by 3% and annual inflation climbed to 9.8%.
According to the final figures released by the INE on Friday, the March decline in the inflation rate is largely explained by price reductions in electricity (down 7.5% month over month), fuels (down 1.4% versus February), and gas (down 2% month over month). Compared with March 2022, electricity prices were 51.8% cheaper, and fuels were 13% cheaper. Gas, however, remained 10.2% higher.
Food also played a role: although prices for food and non-alcoholic beverages rose by 1.1% again from February, the annual rate decelerated by one tenth to 16.5%, as the monthly rise slightly outpaced that seen in March 2022 (1.2%).
In March, prices for legumes and vegetables rose by 5.7% from February (27.8% year over year). Milk prices jumped 30.4%; oil products climbed 28.1%; eggs advanced 24.5%; bread rose 13.4%; and pork, among other key staples, showed nearly 20% increases.
From the Ministry of Economy, March inflation is assessed as nearly three times lower than the year before and marks the lowest level since August 2021. After February’s peak annual increase of 16.6%, food inflation eased in March, with electricity costs drawing notable attention due to the administration’s Iberian Solution policy.