The consumer price index rose again in May to 3.6%, its worst reading in more than a year.

The rebound in May, which has not yet been confirmed by statistics, notes the highest inflation since April 2023, when the consumer price index exceeded 4%.

Analysts are already warning of the particular difficulties Spain will face in crossing the last mile separating our inflation levels from those the ECB considers acceptable. The most immediate cause is the removal of regulatory incentives that artificially restrained the rise in prices for electricity and gas in Spain from the end of 2021, but there are also deeper reasons related to the exclusive dependence on services as a result of the economic recovery process, which has increased pressure on prices in this segment.

This phenomenon can be seen in the evolution of core inflation, which excludes energy and food prices, which, according to data published by INE this Thursday, experienced its first increase in nine months in May and returned to 3%. According to a note distributed by the Ministry of Economy, this increase is explained by increase in the cost of tourism-related services: travel packages, air passenger transportation, accommodation services, etc.

After rising in May, the consumer price index accumulates three consecutive months of gains. The rise began after the consumer price index dropped to 2.8% in February (from 3.4% in January). However, in March it rose to 3.2%, in April – to 3.3% – due to prices for food and gasoline – and in May of this year it already reaches 3.6%.

On a monthly basis (May compared to April), the consumer price index increased by three tenths, thus recording its growth. fifth consecutive monthly increase. However, growth in May was four tenths lower than in April (+0.7%) and the lowest since January last year (+0.1%).

Ministry Economics attributes this growth to a large “base effect.” and once again notes the evolution of the consumer price index in another month: “Inflation has remained stable in recent months, allowing the purchasing power of families to improve, which have already recovered to pre-pandemic levels, while the competitiveness of Spanish companies remains intact. All this against the backdrop of Spanish economic growth exceeding the eurozone average.

The government’s idea of ​​lower prices contrasts with the sharp widening of the inflation differential with the eurozone in recent months. A year ago, in April 2023, when the eurozone was maintaining average inflation at 7%, Spain boasted a harmonized consumer price index of 3.8%, and the government supported the narrative that the Spanish economy was not only growing the most, but also the one with the least inflation. A year later, although average inflation in the eurozone has fallen to 2.4%, according to a harmonized methodology that allows data to be compared across all countries, inflation in Spain remains at the same level of 3.8% and turns out to be the country that poses the greatest difficulty in bringing the level under control. prices

It all comes ahead of the government’s decision on June 30 whether to maintain current tax breaks on food prices, introducing zero VAT on some consumer goods and 4% on pasta and olive oil, or scrap the measures. Brussels asks what could add another extra point to inflation and finally move us away from European standards.