Inflation in Spain drops to 8.4% in April on lower energy prices

OVIEDO, Spain

Spain’s annual inflation rate hit 8.4% in April, down significantly from March’s 9.8% increase, according to preliminary data released Thursday by Spain’s National Statistics Institute.

Lower fuel and electricity prices were the main drivers of the sharp monthly drop in the consumer price index. Not only has the market price of natural gas declined after spiking in March, but the Spanish government also began subsidizing the price of gasoline and diesel by €0.20 ($0.21) per liter.

In March, the high fuel prices triggered thousands of truck drivers to go on strike around the country, which wreaked havoc on national supply chains for weeks.

And while overall inflation went down, food and drink prices continued to increase at a faster level in April than in March.

Core inflation, which doesn’t measure the prices of the most volatile consumables like food and energy, also continued to rise. In April, it hit 4.4% — the highest level since 1995.

While high energy and commodity prices continue to impact the rest of the economy, several experts predict that inflation indeed topped in March.

“Everything indicates that inflation reached its peak in March,” said Finance Minister Nadia Calvino in an interview on Wednesday. “Energy prices are the most important factor and the more we can moderate them, the faster we’ll see inflation decline.”

Electricity prices may continue dropping dramatically in May after the European Commission gave Spain and Portugal the greenlight to cap natural gas prices.

The economic think tank Funcas also predicted that the worst of inflation is behind Spanish consumers, though it expects annual inflation to still come in high at 6.8% for 2022.

Spain’s Caixabank has made similar estimates for 2022 and predicts annual inflation will drop to just 1.1% in 2023.