Spanish inflation eases in April, likely to tick back up in future

Spain’s headline inflation figures for the month of April were released today. Entirely aligning with the preliminary reading, these figures affirmed that the headline figures alleviated by 0.2 percentage points to 1.1 percent year-on-year, the second lowest rate since the end of 2016.

The details implied that the leisure and culture and hospitality categories nearly fully accounted for the fall – perhaps not surprising given that prices adjusted downwards after the Easter holidays – while food and transport costs were higher.

As such, core inflation on the national measure dropped 0.4 percentage points to just 0.8 percent year-on-year.

“Going forward, as the Easter distortion will fall out of the calculations, we expect Spanish core inflation to tick back up, while rising oil prices should add additional upward pressure to the headline rate. Nevertheless, with the amount of slack in the labour market still very sizeable (while it has fallen sharply, the unemployment rate is still a whopping 16.7%), underlying price pressures in the Spanish economy look set to remain weak”, said Daiwa Capital Market Research.

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