Inflation in Spain rose to 3.6% in May due to housing costs

This article was originally published in English

According to him National Institute of Statistics (INE), Interannual inflation in May in Spain amounted to 3.6%, in accordance with market expectations. However, in April it was higher than 3.3%.

This growth occurred mainly due to rising inflation in the housing sector, which increased by 1.2 points and amounted to 5.2%. A significant portion is due to electricity prices, which fell in May 2023 but rose sharply in May of this year.

Transport inflation It also increased to 3.8% due to rising fuel prices, which fell less in May 2024 than in May 2023. Inflation in hotels, cafes and restaurants also increased by 0.7%. Similarly, clothing and footwear inflation rose 2.3% in May, driven by rising demand for new spring-summer collections.

However, prices for food and non-alcoholic drinks fell to 4.4.%, mainly due to the fact that inflation for meat and fruit slowed in May 2024 compared to May 2023. Prices for fats and oils also slowed in May compared to the previous year.

Core inflation on an annualized basis was 3%, in line with market expectations, but higher than April’s 2.9%. On the other hand, monthly inflation in May was 0.3%, which is also justified analysts’ forecastscompared to 0.7% in April.

Southern Europe could be a growth engine right now

Although Spain’s May inflation figure rose, it may be a slight rebound as European Commission continues to expect the country to record strong growth in the coming months.

On its website, the European Commission states: “Economic activity in Spain is expected to grow by 2.1% in 2024. and 1.9% in 2025, driven by domestic demand and supported by continued labor market strength. The implementation of the Plan for Recovery and Resilience (PRR) will support investment growth over the forecast period.

“Headline inflation is expected to continue its downward trend as underlying price pressures remain moderate. Government deficit will continue to decline, driven by favorable revenue trends and the gradual lifting of energy-related measures. “Debt to gross domestic product (GDP) is expected to continue to decline gradually in 2025 to 104.8% from 105.5% in 2024.”

Currently, the largest economies in Southern Europe, which Spain, Italy, France And Portugall, could become a driver of economic growth in Europe thanks to a recovery in the tourism and hospitality sectors, as well as greater job creation.

However they still persist some consequences of the pandemicsuch as economic uncertainty and the complex relationship between debt and GDP in some countries such as Greece.

Valentina Meliciani, a professor of applied economics at Luis University, said, according to Fortune: “For all four – Italy, Greece, Spain, Portugal – there are certain things that are true, e.g. new sense of financial stability and stabilization of bond spreads. But when it comes to economic growth, there are some differences. “Italy has failed to stabilize its debt.”