Prices cool slightly in April

BarcelonaThe prices of consumer goods and services have fallen slightly in April after several months of increases. Thus, the consumer price index (CPI), which shows the evolution of the cost of living, has fallen by 0.1% in Spain compared to March, according to data released this Thursday by the National Statistics Institute.

Thus, prices this month are 8.4% higher than in April 2021, 1.4 points below the 9.8% year-on-year rate recorded one month ago which was a record high since the 1980s. For yet another month, the price of energy was the main driver of inflation, with fuel and electricity as the two items that have risen the most. Food prices also rose, at an even higher rate than in the previous month.

Core CPI rises

Nevertheless, core CPI continued to rise to 4.4% year-on-year, the highest figure since December 1995. Core CPI calculates inflation excluding the more volatile prices, such as energy and fresh food. This record core CPI figure, therefore, indicates that the increase in energy prices is filtering through to the other products. This is because companies are seeing their production costs rise as they have to pay more for fuel or electricity.

Initially businesses usually compensate these extra costs by reducing their profit margin, but when energy price increases continue for months, eventually companies have no choice but to increase the final selling price as well.