The high volatility than energy prices registered last year will continue to affect the overall CPI rate throughout the year. The coming months, in fact, can be marked by a sawtooth inflation, with a more moderate increase in prices in the central months of the year and more pronounced in the last part. This is the scenario predicted by the Savings Bank Foundation, Funcas, which raised the forecast of the cost of living this year by the tenth, up to 4.3% on average.
Inflation accelerated in February in Spain for the second consecutive month until the overall rate stood at 6%. It increased due, above all, to increase in food and non-alcoholic beverages, which increased by 16.6% at the highest rate, at least, since these data began to be collected in 1994. The effect of the VAT reduction approved by the Government for a basket of these products has not been fully realized and the president himself, Pedro Sánchez, warned a few years ago weeks that the Executive foresees a small rebound in the CPI before continuing to lower it.
There is considerable agreement on the part of experts that This month it may bring a significant moderation in price increases by base or step effect. In March of last year – the month immediately after Russia’s invasion of Ukraine – energy products rose in average price by 60.9% year-on-year and fuels and fuels rose by 38.8%. The sources consulted by ‘La Información’ do not even rule out the possibility of controlling up to two points in the general inflation rate.
Funcas, which also saw a significant drop in March due to the “strong step effect of energy products”, warned that in April there will be another step effect in the opposite direction that will once again increase at the general rate. “The action of different effects step throughout the year in different directions – favorable in the central months of the year and unfavorable in the last months -, as a result of the high volatility of energy during 2022″, This means that the interannual rate forecast for December is higher than the annual average, which stands at 5.2%.
Pay attention to the price of oil and gas
In its latest forecasts, Funcas explained that the price of oil remained stable for the third consecutive month at around 83 dollars, while that of the Iberian Gas Market (Mibgas) decreased, and in recent weeks it quoted about 47 euros. per MWH. The future for the latter suggests that it will remain strong until the last two quarters, where it will register a slight rebound. In its central scenario, the organization points out that crude oil will be $ 85 throughout the year, while for the price of Mibgas they take discounted prices in the futures markets as a reference.
In a scenario where the gas price becomes 20% more expensive than what the futures discount is, The general inflation rate will be 4.7% of the average in Spain (four tenths above its central scenario), while if it were 15% cheaper, the rate would be reduced to 3.9%. The foundation also increased its calculations for the underlying CPI by three tenths, which it put at main scenario in 6.5. %. Last month, the rate that excludes energy and fresh food from its calculation rose 7.6%, the highest since December 1986.
Concerns about inflation throughout the euro area led the European Central Bank (ECB) to raise official interest rates by 50 basis points at its meeting this Thursday. It fulfilled the planned script, despite the explosion of the Credit Suisse crisis and the bankruptcy of the American Silicon Valley Bank. The issuer also revised the CPI forecasts upward, explaining that it will continue to be politically oriented due to the persistence of this problem. However, Christine Lagarde emphasized that the entity is closely following the current tensions in the markets and will respond if necessary to preserve price stability and the financial stability of the Eurozone.
