Alejandra Olcese

Updated Friday, March 15, 2024-02:26

  • Prices The INE confirms the February CPI at 2.8% and revises core inflation up one tenth, to 3.5%

Inflation

has moderated in Spain to stand at 2.8% in February after a downward trend that began in July 2022, when it reached its maximum level with a year-on-year increase of 10.8%

.

Since then - or a little later, already into 2023 - all the products we consume have been moderating the price increases, with the exception of services

,

whose price has never stopped rising and was 4% higher in February than in the same month of the previous year.

According to data published this Thursday by the National Institute of Statistics, services excluding rental have accumulated a year of price increases above the general average, something that is beginning to worry experts.

"The most notable thing is the

strength of inflationary pressures in services,

which could be a consequence of the second round effects on salaries and margins, although it could also be a specific acceleration derived from the price adjustments that are usually carried out at the beginning of the year,"

Funcas

pointed out this Thursday .

For now, the

Bank of Spain

has not detected second-round effects in the economy (those that occur when companies take the opportunity to raise prices more than they need to maintain their margins and when workers' salaries more than compensate for the loss. of purchasing power, which generates more purchasing capacity and, ultimately, more inflation), but now it does see it as a

medium-term risk.

"Although the rate of moderation of inflation and the evolution of margins and wages that are being observed at the moment do not point in that direction,

the possibility of more intense feedback processes occurring in the future

cannot be completely ruled out.

between prices and wages and/or business margins, especially in a context in which the dynamism of compensation per employee is being greater than that corresponding to the wages agreed upon in the agreement and the labor market is showing a notable degree of tension. In this sense, the fact that, in recent months, the moderation path of underlying inflation in Spain has been somewhat less pronounced than anticipated forces us to be

cautious before considering the current inflationary episode subdued,

they warned in their report. Macroeconomic Projections.

For the remainder of the year, Funcas expect that the price increase in the sector will remain above 3% and that it will close the year with an average increase of 3.5%, higher than that expected for the general CPI, of 3 ,1%.

This is a more pessimistic forecast than that of the Bank of Spain, which believes that prices will rise on average by 2.7% this year.

The services that increase the most

When the goods and services that have higher rates of inflation and are, therefore, more expensive compared to last year are analyzed, many more services now appear than before.

Along with olive oil, which always leads the ranking, there are now

passenger transport by sea

(23.1% more expensive than a year ago),

national tourist packages

(+18.7%), passenger transport in metro (+17.4%), license fees and subscriptions to television and radio networks (+16.8%), private insurance related to health (+9.5%) or hotels

, hostels, pensions

and other accommodation services (+9%).

The increase in prices of services occurs in a context of

robust demand

.

In fact,

BBVA Research

has confirmed that there has been a change in consumption preferences from goods to services, a "

change in the consumption habits

of families since the pandemic, which has increased the weight of services in their spending. This seems to be a shared trend in developed economies," they point out.