MADRID – Spain’s European Union-harmonised 12-month inflation rate (HICP) rose to 3.3% in March from 2.9% in the period through February on the back of higher electricity prices, final data released by the National Statistics Institute (INE) showed on Friday.
The value added tax (VAT) on electricity returned to 21% from 10% after the Spanish government discontinued the measures taken to ease the pain of inflation after the war in Ukraine broke out.
The INE data was above the flash estimate from March 27 and the average estimate of 3.2% from analysts polled by Reuters.
“Today’s data are in line with expectations, so inflation could average around 3.1% during 2024 (3.2 by the end of the year) and fall to 2% on average during 2025,” Miguel Cardoso from BBVA Research said in an email. Inflation in the euro zone has given signs of abating.
The European Central Bank’s (ECB) President Christine Lagarde said that a euro zone decline in inflation, estimated at 2.4% in March, not far from the 2% target, “will not be linear” with fluctuation expected in the coming months.
Rapid wage growth in the euro zone, seen by the European Central Bank (ECB) as the single biggest inflation threat, is slowing, investment is weak and bank lending is stagnant – all pointing to a further decline in price pressures.
Spain’s core inflation, which strips out volatile fresh food and energy prices, was 3.3% in the 12 months through March, down from 3.5% in the period through February, INE said.
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