Spanish September inflation slows to 9.3% on energy, transport

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Spanish consumer prices

By Belén Carreño

MADRID (Reuters) – Spanish prices rose 9.3% in the 12 months to September, National Statistics Institute data showed on Thursday, a fall of more than 1 percentage point, thanks to a public transportation price cut and an electricity price slowdown.

The reading was the lowest since May and lower than the 10.1% forecast by analysts polled by Reuters. The locally measured inflation figure fell to 9% from 10.5%.

Core inflation, which strips out volatile fresh food and energy prices, was at 6.2% year-on-year, down from 6.4% in August, the INE data showed.

There is a statistical effect in the sharp reduction as energy prices in September 2021 had already seen a hike and initiated the upward path.

The government in September introduced a subsidy programme of free train tickets and price cuts for public transportation, which also contributed to curbing the general price increase.

The successive government’s relief packages, with tax reductions on power and gas and a cap on gas price for power generation, also helped contain inflation.

Spain hit an inflation peak in July, when the EU-harmonised rate was at 10.7%, and the government and the Central Bank expect prices to moderate in the coming months.

Soaring production costs, from materials to power, services and salaries, started weighing on business activity in the third quarter, the Bank of Spain said in a report on Thursday.

Earlier this week, the INE reported industrial prices had increased 42% in the 12 months through August.

“The reported price and cost developments point to a narrowing of margins,” the report said.

Sectors such as hospitality and leisure weren’t affected, the central bank said.

(Reporting by Marta Serafinko and Belén Carreño, editing by Inti Landauro and Angus MacSwan)