Bank of Spain warns food prices to rise 12.2% on average this year


Bad news for Spanish families. Despite the fact that general inflation is set to moderate in the coming months, food prices will continue to give households’ pockets no respite. This is what the Bank of Spain warned on Wednesday during the presentation of its quarterly report on macroeconomic projections.

The report is confident that, despite the upturn in inflation in January and February, the general CPI will resume the deceleration process that began last summer and, in fact, places the average inflation rate for this year at 3.7%, 1.2 points lower than in the December report, as a result of both the gradual easing of energy prices and the staggering effect of the sharp rises recorded last year.

However, the good news ends there because of core inflation and food prices, which, as the Bank warned on Wednesday, will continue to cause a stir in the coming months “given that the transmission of past increases in costs to the final prices of consumer goods and services is subject to certain lags”.

In other words, companies have not yet finished passing on the abrupt cost increases to their selling prices, which augurs a further increase in the cost of the shopping basket. In fact, the supervisor considers that food inflation, which rose by a record 16.7% in February, has not yet reached its peak, something it expects to happen in the course of 2023.

In this difficult context, in which families have already suffered a sharp loss of purchasing power, the Bank of Spain forecasts that average food inflation will be around 12.2% this year, well above the 7.8% it predicted in December.

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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.