The October inflation rate held steady at 3.5 percent, the same level recorded in September, according to the principal CPI indicator released by the National Institute of Statistics (INE) on Monday. On a monthly basis, the consumer price index (CPI) rose by 0.3 percent in October versus September. While prices fell, the decline was smaller than in October 2022, with some categories such as energy and food moderating. INE noted that some prices rose less than a year earlier, contributing to the overall moderation.
The preliminary October CPI published by INE this Monday will not be final until November 14. At that time, the month-to-month changes for each price category, including food, will be detailed.
Since the November inflation figure is not yet known, the data for October does not provide a full picture of future movements.
The October inflation rate helps approximate the reference point for the 2024 pension increase. The average inflation from December 2022 to October 2023 stands at 3.9 percent, which informs the projected rise in pensions for the following year. The final pension adjustment for 2024 will be determined once November’s inflation figure is available.
In October, core inflation — the measure that excludes the most volatile unprocessed foods and energy prices — fell to 5.2 percent, a drop of 0.6 percentage points and the lowest rate since June of the prior year.
This outcome is influenced by the base effect in electricity and natural gas. In October 2022, the monthly electricity bill fell by 22.5 percent, and the rate for natural gas and city gas dropped by 8.4 percent. Yet the base effect for fuel and food prices favours October’s CPI. In October 2022, gasoline rose by 2 percent and diesel by 3.5 percent compared with September. The share of food and non-alcoholic beverages stood at 2.3 percent.
Fuel prices followed a moderate trajectory in October after twelve straight weeks of increases. Gasoline and diesel prices declined for four and three consecutive weeks, respectively. Despite this, prices remain above pre-war levels observed before the invasion of Ukraine.
Measures against inflation
From the government’s perspective, the October inflation data support Spain’s position as a leading euro area economy with low inflation and ongoing growth across the euro zone. The Ministry of Economy emphasizes that current economic policies bolster the competitiveness of Spanish businesses and support increased purchasing power. An agreement on a 3.41 percent average wage increase in collective agreements signed in the first nine months of the year has been reached.
Over the next two months, the government will decide whether to extend anti-inflation measures into 2024. These measures, set to expire in December, were established to offset higher energy and food costs. Teresa Ribera, the third vice-president and acting minister for the Ecological Transition, advocated extending most of these measures through 2024, including the VAT relief on electricity and gas and continued social electricity and gas discounts. However, international bodies such as the IMF and OECD argue that it may be time to end these supports. The Spanish Tax Agency (Airef) estimates a budget impact of 15 billion euros for 2024.
The data expected on Monday, with inflation projected at 3.5 percent for October, mark the highest level since last April’s 4.1 percent. The final figures will be confirmed by INE on November 14.