Inflation Drops Seven Tenths in March to 2.3% but Food Prices Continue to Rise

Inflation in Spain has fallen for the first time since October 2024. The Consumer Price Index (CPI) dropped by seven tenths in March, reaching 2.3%, very close to the European Central Bank's (ECB) target of 2%, according to data confirmed by the INE this Friday.

This drop to 2.3% from the 3% inflation rate in February is mainly due to the reduction in electricity bills, thanks to increased renewable energy generation, particularly wind and hydroelectric power, due to storms that have swept across the Peninsula over the past two weeks.

The data confirmed by the INE highlights the increase in the cost of the Spanish food basket, which rose by 2.4% in March, the highest figure since August 2024 and two tenths above the February food price increase. Foods such as meat, eggs, fruits, and cocoa continue to record year-on-year increases above 10%.

A very positive aspect of March is the continued reduction in olive oil prices, which has intensified and accumulated a 37.9% drop over the past year. Nevertheless, its cost in supermarkets remains nearly triple what it was three years ago when the price crisis erupted.

Energy prices did not follow the same trend at the beginning of the year, when in January and February, electricity bills soared due to the VAT recovery, which increased from 10% to 21% from January 1st after the end of the anti-crisis aid package.

However, in March, the heavy rains and strong winds recorded in Spain led to a drop in energy prices due to the increase in renewables, as explained by the Ministry of Economy in a statement. The CPI thus breaks with five consecutive months of increases and reaches its lowest level since last October.