Lower gas and electricity prices reduce inflation, which is close to the ECB's target.

BarcelonaInflation is now almost at the levels targeted by the European Central Bank (ECB), thanks primarily to lower electricity and gas prices. Thus, prices for consumer goods and services rose by 2.1% last month compared to April 2024, a rate just one-tenth above the European monetary institution's 2% target, according to published data from the Consumer Price Index (CPI, the indicator that measures the cost of living for families).

However, despite the drop in energy prices, overall prices rose by 0.6% compared to March in Catalonia, mainly due to higher prices for clothing and footwear, leisure and cultural goods and services, and restaurants and hotels, a common occurrence around this time of year, when the good weather arrives. Furthermore, more tourist arrivals are also being recorded, which is also driving up the prices of these products. In the longer term, the fact that fuel prices are at lower levels than a year ago—largely due to the fall in oil prices—has also helped to lower inflation.

As for the CPI for Spain as a whole, it closed April with an annual increase slightly higher than that of Catalonia, 2.2%, while the monthly increase was also 0.6%, as already reported. had advanced to the INE on April 29.

These data confirm that the CPI continues its downward trend and is now approaching the 2% year-on-year target set by the ECB for European economies. Specifically, in Catalonia, the rate closed March at 2.2%, which was cut to 2.1% in April, while Spain remains at a similar level. However, it should be noted that figures below 2% were already recorded in September and October, but prices rose again during the winter, largely due to higher energy prices.

Normalization of inflation

However, current rates have long been much lower than those recorded during 2022, when the CPI even grew above 10% annually in some months during the summer as a result of the energy crisis stemming from the Russian invasion of Ukraine. Subsequently, the cost of living for families has progressively fallen to current levels and has not returned to the rates of three years ago.

The ECB's sole mandate is to maintain the prices of consumer goods and services at stable levels throughout the eurozone. This leads the body chaired by Christine Lagarde to aim for long-term average price growth of slightly below 2%, with that figure as a ceiling. The fact that this is a long-term average means the ECB accepts that at times the CPI can grow more than 2% and that this can be offset by shorter periods of inflation during which it grows less. However, this rate is the one used as an indicator to see if prices have stabilized at the levels sought by the monetary authorities.

The fact that inflation has been moderating explains why, in parallel, the ECB has also been cutting interest rates, which rose with the aforementioned inflationary crisis of 2022. Thus, just like the moderation in prices, the fall in prices has been hitting victims harder; their interest costs were skyrocketing, but have now returned to lower levels.