Food does not give respite despite the VAT reduction and soared 16.6% in February, the highest rise since there are records

Prices rose again in February, especially for food. The interannual variation rate of the CPI  has risen slightly to 6% , as reported on Tuesday by the National Institute of Statistics ( INE ). At the same time, core inflation has set a new maximum, after rising one tenth to 7.6%. The greatest pressure continues to be on food, whose CPI has registered a new all-time record, reaching 16.6%, despite the VAT reduction.

The INE has revised downward one tenth of its preliminary estimate advanced at the end of February. Even so, both the general CPI and the core CPI -excludes energy and unprocessed food, due to its high volatility- have grown by one tenth in year-on-year terms, with respect to the January data. The general rate has risen slightly from the 5.9% registered at the beginning of the year to 6% , thus accumulating two consecutive months of rise and remaining 4.8 points below the ceiling of 10.8% reached in July. More pronounced has been the increase in monthly terms. In February alone, prices rose 0.9%, the biggest monthly rise since June.

The tax on certain basic products has been reduced since January. The Government has reduced the VAT on oil and pasta from 10% to 5% for six months and has abolished the super-reduced rate of 4% that is applied to basic foods, such as bread or milk. They have also been exempted from this tax until June 30, bread-making flour, cheese, eggs, fruit, vegetables, legumes, potatoes and cereals. However, VAT remains intact on other basic foods such as meat, fish, yogurt, bottled water, sugar, butter, coffee, fried tomato and all kinds of preserves.

The ‘purple’ wing of the Government calls for additional measures and has insisted in recent weeks on the “urgency” of creating a shopping basket with limited prices to alleviate the impact of inflation, an option that the Socialists reject. Last week, the first vice president Nadia Calviño invited supermarkets to be the ones who bet on initiatives of this type, in the image of those launched in France. “We assume that those multinational groups that have a presence in Spain will extend any trade policy that may benefit French citizens to Spanish citizens,” she said, referring to the basket of basic products with capped prices offered by some French supermarkets.

The rise in food prices is making a dent in the pocket of families. According to a study carried out by Findus Spain , 62% of Spaniards perceive an increase of between 10% and 30% in spending in their shopping cart. Specifically, 44% affirm that they have had to give up food that is not essential in the current economic context marked by inflation.

The European Commission’s inflation forecast for Spain in 2023 stands at 4.4% , still above the 2% target set by the European Central Bank. This goal is temporarily suspended, but Brussels has already asked governments to adjust their budgets to return to fiscal rules next year.


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