Spain CPI Soars 1 Percentage Point In March To 1.3%, Its Highest Level In Almost Two Years

electricity prices

The Consumer Price Index (CPI) rose by 1% in March compared to the previous month, taking it to 1.3%, almost 1.5 points higher than in February (0.0%), according to preliminary data published today by the National Statistics Institute (INE).

With this upturn, with which the annual CPI marks its third consecutive positive rate, inflation climbs to levels unseen for almost two years. In fact, such a high CPI rate had not been reached since April 2019, when it stood at 1.5%.

In addition, the year-on-year rate of inflation had not recorded such a hefty jump (of 1.3 points) since the end of 2016, when it rose from 1.6% in December of that year to 3% in January 2017.

The sharp increase in prices in March is mainly due to the rise in the price of electricity and fuels, compared with the decline they saw in March 2020.

The INE includes in the preliminary CPI data an estimate of core inflation (without unprocessed food and energy products), with a figure of 0.3% on a year-on-year basis for March, the same rate as in February and one point below the general rate.

In the third month of 2021, the Harmonised Index of Consumer Prices (HICP) reached an y-o-y rate of 1.2%.

On the other hand, the HICP leading indicator rose by 1.9% on a monthly rate.

The INE will publish the final CPI data for March on April 14.

Meanwhile, German inflation returned to positive figures in March, rising to 1.4% in annualised terms, up from -1.2% previously and above the expected 1%. Month-on-month, CPI has marked 1.7%, above market expectations of 1.3%, and already very close to the ECB’s target of 2%.

Inflation is expected to pick up appreciably in most developed economies this month due to the so-called “base effect.” This reflects the fact that in March 2020 many product and service prices fell sharply as a result of the start of massive lockdowns. This effect will continue to drive this variable upwards in the coming months. That said, according to the analysts’ consensus, the upturn in inflation will be of a temporary nature.

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The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.