THE rate of inflation held steady at 3.2% in May despite an uncertain geopolitical backdrop driven by the war in Iran, according to provisional figures released on Friday by the National Statistics Institute (INE).
The data, set to be confirmed in two weeks’ time, suggests that the rate of price increases remained level from April, with officials pointing to the impact of a €5 billion package of measures introduced in March to counter the impact of the conflict in the Middle East.
That included a cut in VAT applied to electricity, gas and fuel, saving motorists up to €10 every time they filled up.
Before that, inflation leapt to a rate of 3.3%.
“The figure is slightly better than anticipated,” said Raymond Torres, director of economic analysis at Funcas.
“Energy prices have probably had a positive influence – for example, the price of a gas cylinder has fallen.
READ MORE: Inflation in Spain climbs steeply to 3.3% as impact of Iran war takes hold
“Core inflation, however, is still rising slightly, so the structural problem of inflation persists. Although the figure has been favourable, we still have a problem with the inflation gap compared to the rest of the eurozone partners.”
According to the INE, the rate of core inflation – which excludes energy and unprocessed food – stood at 2.9 per cent, marking an increase of one-tenth of a percentage point from April.
Inflation in food and non-alcoholic beverages has remained flat, helping to stabilise the headline rate of inflation.
But economists warn that price rises could be on the way from next month.
From June 1, some of the measures will expire, pushing up the rate of VAT applied on electricity from 10 per cent back up to 21 per cent.
“We expect a rise in the coming months due to the step effect and because the rise in energy prices will gradually feed through to other products, so we could reach levels close to 4% in the summer,” said Torres.
A tax cut applied to fuels will remain in force until at least June 30.
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Ben is an award-winning journalist who joined the Olive Press in January 2024 and is currently Deputy Digital Editor. He loves the adrenaline rush of a breaking news story and the tireless work required to uncover an eye-opening exclusive. He has reported from Marbella, Barcelona and London, where he is currently studying an MA in International Journalism. Send tips to ben@theolivepress.es
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