Clothing and Tourism Push Up Inflation
May 18th, 2011
Two weeks ago the National Statistics Institute predicted that annual inflation would climb to 3.8% in April, the highest rate in almost three years, and two points more than the previous month. On Thursday, while confirming this figure, the Institute commented on the price index, which had been worryingly low for a year and a half, and on more recently when oil prices reached record highs.
The monthly CPI rose 1.2%, the highest since October 2007 and analysts agree that the figures announced last week are worse than expected.
The price spike in March and April was influenced by products relating to leisure and culture, which experienced the biggest rise in two years, and clothing, which has been buoyed by the change of season. Looking at the progress of prices over the past year, energy products, leisure and culture, and food and soft drinks had most influence.
Core inflation, which excludes more volatile products – unprocessed food and energy products – rose four points in April from the previous month to 2.1%. Since the annual rates of these more volatile components have grown less than the rest in the last month, rising inflation has been due to other products that make up the CPI basket. This includes processed food (4.5%) and services (2.2%).
Analysts from La Fundación de las Cajas de Ahorros (FUNCAS) believe that inflation already peaked in April at 3.8%, provided the price of oil doesn’t continue rising. If this is the case, the rate at the end of the year would remain at 2.8%. But if oil prices continue to climb, FUNCAS predict 3.6% inflation for December.
