The drop in gasoline promised to give inflation a break in the fall. Until the price of light arrived

Inflation gives the Spaniards a break, but one so light and so surrounded by uncertainty that it is not clear if it will be the beginning of a breath of air or a slight sigh before undertaking a new slope. The Consumer Price Index (CPI) fell four tenths in August, from 10.8% in July to the current 10.4%, according to the National Institute of Statistics (INE). A brake on the escalation of the cost of living that is boosted, above all, by the drop in fuels, and that could be left in the lurch because other important goods, such as electricity or food, continue to become more expensive without a brake.

fuels. Since the beginning of August, the price of fuel has been gradually declining after reaching its historical maximum in mid-June, with an average of 2,152 euros per liter of gasoline and 2,199 euros per liter of diesel, without applying the government subsidy. And by the middle of this month, the reduction in prices was already pronounced and 30 cents less per liter on average than in June, a figure that has been maintained, more or less, until now.

This significant drop in price after months of escalation is what has contributed to the fact that inflation, which has not stopped growing since April, has slowed down and has even dropped slightly. But it is still early, very early, to launch the bells in flight, since the price of fuel is still far from returning to figures prior to the war in Ukraine and other basic goods, such as electricity or the foodhave taken over from rising prices and are the main threat to Spanish pockets next fall.

The electricity shot. After several months of calm, thanks in part full gas in force in Spain and Portugal, not even the so-called “Iberian exception” has prevented the international rise in electricity prices from increasing the electricity bill in our country to the point, once again, of historical highs.

The reasons for this increase? New Russian gas cuts, low hydroelectric production as a consequence of the drought and the drop in wind energy production, which always reaches minimum levels in summer. And, also, the surcharge for the gas cap that all the electricity companies are introducing in the new contracts, as we explained in Xataka.

This has caused the light to have reached this Tuesday the third highest price in its history in Spain, and nothing seems to indicate that this escalation is going to subside in the short term. This electrical rebound has been such that it is even affecting the Spanish stock market, the Ibex35, where Iberdrola surpassed Inditex on Monday as the largest listed company for a few hours.

Domino effect. Thus, the new rise in electricity prices is once again having a domino effect on almost all products, as was the case with fuel or electricity itself a few months ago. Because the rise in the price of energy increases production costs and storage of many goods and execution of many services, and this ends up being transferred to consumers.

The INE itself, in his note on the evolution of the IPC published yesterday, highlights the increase in the prices of electricity, food, restaurants and tourist packages during the month of August. And the first two, being basic goods, are the ones that could leave the slight drop in inflation in August anecdotal if, as it seems, they continue to climb in September.

The government is optimistic. The Government, however, considers that this is the beginning of the stabilization of inflation. The Minister of Economic Affairs, Nadia Calviño, said in an interview on Spanish Television that the rise in prices has begun to slow down thanks to the Executive’s packages of measures and that it will continue this downward path in the coming months. Regarding the rise in the price of electricity, Calviño acknowledges the problem, but assures that, thanks to the gas cap, its effects will be much less than expected.

Image | Andrey Metlev

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