Sat. Jun 22nd, 2024
Inflation in Spain Reaches 3.2% in March Following Three-Year Return to 21% VAT

In March, Spain experienced a sharp increase in inflation of 0.8%, driven by the end of tax cuts on electricity and the return to a 21% VAT rate. This was higher than expected by the market consensus, with Funcas projecting a lower rate for March. The prices of goods and services in Spain were almost half a point more expensive in March compared to the previous month.

The monthly price evolution shows a continuous rise since the beginning of the year, with prices increasing by 0.8% in March compared to February, the largest increase since February 2023. The underlying inflation also rose by 0.5% in monthly terms. The provisional data released by the National Institute of Statistics suggest that the underlying inflation rate will be moderated to 3.3%, the lowest rate in the last two years.

The restoration of the normal VAT rate on electricity and the rise in gasoline are among the reasons for the increase in inflation. Services, more than goods, are driving prices up, and food products like olive oil are also experiencing significant price increases. Spain is currently facing an upward trend in food prices, making it one of only three countries in Europe where basic food products are becoming more expensive.

The Ministry of Economy attributed this slight increase in inflation to several factors such as energy costs and changes in exchange rates, but also warned about rising prices for some essential goods like gasoline and olive oil which could have an impact on salaries and margins for businesses alike.” Despite this ongoing trend, it is important to note that some sectors such as construction have been experiencing deflation due to excess supply.”

By Aiden Nguyen

As a content writer at newscholarly.com, I delve into the realms of storytelling with the power of words. With a knack for research and a passion for crafting compelling narratives, I strive to bring forth engaging and informative articles for our readers. From decoding complex concepts to unraveling current events, I aim to captivate and educate through the art of writing. Join me on this journey as we explore the ever-evolving landscape of news and knowledge together.

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