Lower fuel and leisure costs cut the cost of living by less than 2%.
The CPI grew by 1.8% annually in May in Catalonia
BarcelonaThe fall in fuel prices and the price of leisure and cultural services drove inflation down in both Catalonia and Spain. Last month, prices in Catalonia rose below the 2% annual threshold, the maximum figure set by the European Central Bank and which was common before the inflationary surge beginning in 2021, according to data from the Consumer Price Index (CPI, the indicator that measures the cost of living) published this Friday by the National Institute of Statistics.
Thus, in Catalonia, the CPI grew a slight 0.1% compared to April, while compared to May of last year, the increase was 1.8%. In Spain as a whole, the monthly increase was also 0.1% and the annual increase was 2%, one tenth of a percentage point higher than the provisional data published by the INE itself May 30th.
Fuel prices were one of the factors explaining the moderation in inflation in May. In Catalonia, they fell by 1.9% compared to April and accumulated a 9.3% decrease compared to a year earlier. This has had an impact on transportation services, whose cost also fell by 2.9% compared to April and which have also accumulated declines of over 8% between May 2024 and this year.
The other factor to consider was leisure and cultural services, particularly tourism services. The fact that Easter this year fell in April meant that the usual price increases for hospitality and tourism services at this time of year then occurs, with the resulting reduction in May, when demand drops again in anticipation of the arrival of summer. Although leisure services in Catalonia fell overall, tourism accounts for a large part of the reduction. The price of package holidays in Catalonia fell 9.4% compared to April, although overall hotel and restaurant prices rose 0.5%.
On the other hand, fashion was the sector that saw the greatest price increases: between April and May, clothing rose 5.1% and footwear 4.6%, according to the INE (National Institute of Statistics).
As for food, one of the elements that most impacts families' finances, prices rose a slight 0.1% monthly on average in Catalonia. Of note is the 4.8% drop compared to April for fresh vegetables and pulses and a 5.8% drop for oils. Thus, the downward trend in the cost of olive oil continues – in one year the price of oils has fallen by more than 34% – after the strong increases recorded a year ago, when the drought significantly reduced production both in Catalonia and in other producing areas of Spain, especially Andalusia.
The cost of fresh fish also fell, in this case by 0.9%, while fresh fruit rose by a significant 4.7%.
An annual inflation rate of less than 2% was common during the years of the financial crisis and its subsequent recovery, as well as during the pandemic. On the contrary, prices began to skyrocket in late 2021 due to what economists call a supply shock; that is, due to product shortages, in this case caused by the economic recovery after the toughest months of Covid.
Specifically, the zero-code policies implemented by the Chinese government They kept part of the industry of this country stopped, which added to the logistical collapse of the international production chains, especially due to maritime transport, which caused supply problems to many industrial sectors and, consequently, a rise in prices on a global scale. Just as these problems began to be resolved, the Russian invasion of Ukraine in February 2022 triggered an energy crisis that drove up the price of oil and natural gas, especially in Europe, where many countries were heavily dependent on the energy supplied to them by Moscow.
The peak inflation rate occurred in the summer of 2022, when the annual CPI growth rate in Catalonia and across Spain exceeded 10%. Since then, prices have slowly returned to normal, and last month they were already below the 2% threshold that the ECB considers the optimal long-term rate and which was the usual level over the past twenty years.