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A significant increase in inflation
In November, inflation in Spain accelerated considerably, reaching 2.4% on an annual basis. This increase represents the highest growth rate since last August, according to data provided by the national statistical agency. Compared to 1.8% in October, this increase is in line with the forecasts of economists, who had anticipated an increase in consumer prices
.
Price pressures and future expectations
Despite the general surge in prices, a key indicator of inflationary pressures, which excludes energy and some foods, showed a slight decline to 2.4%, contrary to expectations of an increase.
This suggests that, although there is a temporary increase in inflation, the underlying pressures may not be as strong as expected. European Central Bank (ECB) officials had already anticipated an increase in inflation in the euro area, with the goal of stabilizing around 2% next year
.
Implications for monetary policy
The Spanish data are the first to emerge from an important eurozone economy, with Germany publishing its data later. Analysts estimate that inflation in the euro area could reach 2.3% in November. The ECB seems ready to proceed with a fourth reduction in the deposit rate, bringing it to 3%, while further monetary easing could be expected for 2025. However, ECB officials, such as Isabel Schnabel, warn not to reduce financing costs too much, to avoid compromising economic stability
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The causes of the increase in inflation in Spain
The recent increase in inflation in Spain was mainly attributed to comparisons with energy and fuel costs, which had fallen towards the end of 2023. Despite this, the country maintained relatively low inflation in the previous months, with rates below 2%. Spain has demonstrated significant economic resilience, contributing to robust growth compared to other economies
in the region.
Government measures and the employment situation
The Spanish government has started to withdraw some consumer protection measures, such as VAT reductions on electricity bills, while others, such as free train tickets, remain in effect. A positive indicator of the country’s economic health is unemployment, which is at its lowest levels in 15 years. This scenario is contributing to an increase in wages and an increase in service prices, which remain a concern for the ECB
.
