Spain’s consumer price inflation eased unexpectedly in May to the lowest level in nearly two years, mainly due to a fall in fuel prices, flash estimates from the statistical office INE showed Tuesday.<\/p>\n
The consumer price index, or CPI, climbed at a slower pace of 3.2 percent year-over-year in May after a 4.1 percent increase in April. Meanwhile, economists had expected inflation to rise to 4.4 percent.<\/p>\n
The latest rate was the lowest since July 2021, when prices had risen 2.9 percent.<\/p>\n
This development is mainly due to the decrease in fuel prices, which increased in May of the previous year, the agency said.<\/p>\n
The slowdown in inflation was also influenced by lower prices of food and non-alcoholic beverages compared to last year.<\/p>\n
Excluding non-processed food and energy prices, core inflation eased for the third successive month to 6.1 percent from 6.6 percent in April. \u00a0<\/p>\n
On a monthly basis, overall consumer prices edged down 0.1 percent in May, reversing a 0.6 percent increase in the previous month. Economists had forecast a 0.1 percent increase.<\/p>\n
ING economist Wouter Thierie said service sector inflation remains stubbornly high for now, though it is expected to start cooling structurally for the first time, especially after the summer months.<\/p>\n
“We forecast an average inflation rate of 3.9 percent for all of 2023,” Thirrie said.<\/p>\n
“The expected slowdown in inflation can be attributed to lower energy prices and cooling food inflation, which will also dampen the pass-through effect of these components to the prices of other goods and services.”<\/p>\n
EU harmonized inflation moderated to 2.9 percent in May from 3.8 percent a month ago. The expected increase was 3.5 percent.<\/p>\n
Month-on-month, the HICP dropped 0.2 percent, while prices were forecast to rise by 0.2 percent.<\/p>\n
“Inflation in the euro-zone as a whole should eventually follow a similar path, but we would not jump to any conclusions about the rate for May, data for which are due on Thursday,” Andrew Kenningham, a chief economist at Capital Economics, said.<\/p>\n
Separate official data showed that Spanish retail sales growth eased to 5.5 percent in April from 9.9 percent in March.<\/p>\n
Sales of non-food products grew by 14.3 percent annually in April, and those of food goods rose by 1.6 percent. Meanwhile, sales at service stations showed a decline of 4.8 percent.<\/p>\n
Compared to the previous month, retail sales advanced 0.9 percent in April versus a 0.7 percent gain in the prior month.<\/p>\n
In a separate report, ING economist Thierie said tourism will be a key driver of growth in Spain this year with household consumption declining and expected interest rate hikes dampening investment dynamics.<\/p>\n
“Our forecast is for growth of 1.9 percent for Spain, surpassing the eurozone’s expected growth rate of 0.5 percent,” the economist added. <\/p>\n