The cost of living falls in September despite rising fuel prices.

BarcelonaThe cost of living for Spanish families has fallen this September compared to August, although fuel and, to a lesser extent, electricity prices have risen almost 3% above year-ago levels, according to advance data on the Consumer Price Index (CPI, the indicator that measures the cost of living) published this Monday by the Institute.

Specifically, the total amount of consumer goods and services for households has fallen by 0.4% this month compared to the previous month. This is the third consecutive month without increases, as the monthly variation was 0% in August and -0.1% in July.

On the other hand, the rise in fuel and electricity prices in recent months has once again pushed up the cost of living, the CPI, compared to September 2024. Prices have thus increased this month by an average of 2.9% compared to September of last year across the country. the annual rate recorded in August in Spain as a whole.

The phenomenon of the CPI rising year-over-year when prices have fallen month-over-month is mathematically known as base effectIn this case, prices have fallen in the last three months, but they rose during the remaining nine months of the last year, primarily due to the rise in energy prices. This explains why, despite having recently fallen in price, the cost of living has increased when looking beyond this most recent period of decline and comparing it with a year ago.

As for core inflation—which excludes the most volatile items, such as energy and fresh food—it rose 2.3% annually, placing the rate below the general CPI for the fourth consecutive month. The data published this Monday are provisional, and the INE will release the final figures on October 15, when they will also be published broken down by autonomous community and product.

Price Normalization

Over the past nearly two years, prices have moderated following the bout of sharp increases recorded between 2021 and 2022 across the world, but particularly in Europe. In that case, first due to the economic recovery following the pandemic (with the creation of industrial bottlenecks) and then due to the energy crisis stemming from Russia's invasion of Ukraine, the annual inflation rate reached over 10% in the summer of last year, but subsequently moderated.

In recent months, the annual change in the CPI has generally hovered below 3%, but also above 2%, the long-term target set by the European Central Bank, the body responsible for controlling prices. Thus, inflation is still above the levels considered optimal by the authorities and above the levels seen for much of the 2010s, when the crisis in the eurozone—and especially in Spain—depressed demand and reduced inflation to the point that some years ended with deflation (falling consumer prices).

Geopolitical tensions and conflicts in the Middle East have driven up the cost of energy, especially petroleum products such as fuel. Electricity prices also suffered, and electricity bills rose in Spain throughout the past winter and spring. However, energy prices have moderated in recent months, which explains the lower cost of living over the past three months.