A few weeks ago the advanced indicator of Spanish CPI was published. Prices in Spain fell by 0.4% in September from a year earlier. This means six months of negative yearly rates since the outbreak of the COVID-19 pandemic, with a record low of -0.9% year-on-year recorded in May. In monthly terms, prices rose by 0.2%. The harmonised indicator (used for comparisons at European level) closed September at -0.6% year-on-year, a tenth of a percentage point higher than in August.
In view of these figures, economists at Funcas have cut by one and two tenths of a percentage point their forecasts for the average annual CPI rate for this year and next to -0.3% and 0.7%, respectively. This is because crude has been trading in recent weeks in the range of $ 41, below the level seen in its previous scenario of projections.
So based on a crude oil price of $43, Funcas’ central scenario points to an average inflation rate of -0.3% this year and 0.7% next year. December’s year-on-year rates would be -0.5% this year and 1.2% in 2021.
If the price of oil were to rise to $55 over the next six months, Funcas’ forecasts point to an average annual CPI rate of -0.2% this year and 1.6% in 2021.
In the event that oil prices drop to $28.5, the average annual rate would be -0.2% in 2020 and -0.3% in 2021, according to the think tank’s calculations.