Inflation runs amok to 9.8% in March, its highest level since May 1985

New inflation record. The Consumer Price Index (CPI) stood at 9.8% year-on-year in March, its fifteenth consecutive positive rate and the highest level since May 1985, according to provisional data published this Wednesday by the National Institute of Statistics (INE).

If the data is confirmed, which will be final on April 13, it would mean an increase of 2.2 points in its annual rate over the variation recorded in February, of 7.6%. Such a high advance has not been recorded in a single month since April 1977 (+4.3 points then), almost 45 years ago, according to statistics.

The price increases of the electricity, fuels and fuels and food and non-alcoholic beverages, were higher this month than in March 2021, although all components that measure inflation increased, according to the leading indicator

Regarding the annual variation rate of the Underlying inflation (general index without unprocessed food or energy products), this increased four tenths, to 3.4%. If confirmed, it would be the highest since September 2008.

On monthly rateconsumer prices rose 3% from February, their biggest monthly rise in any month since 2002, when the methodology was changed to better adjust for market developments.

The Government attributes 73% of this rise to the war in Ukraine

After knowing the advanced rate of the CPI, the Ministry of Economic Affairs has published a statement in which it ensures that 73% of this rise is due to the impact of the invasion of Ukraine on the prices of energy and unprocessed food.

The Government approved yesterday in the Council of Ministers the shock plan against the economic consequences of the war that contains measures worth 16,000 million euros to contain in the next three months the increase in the inflation rate (especially due to energy prices) and shield the rate of growth. “It is urgent to deploy it” to initiate in the short term the reduction of inflation to more moderate levels, indicate from the Ministry.

In this sense, the President of the Government, Pedro Sánchez, has been convinced that the national plan to respond to the war will allow “bend the curve (of inflation) and stabilize the cost of living”, as indicated during his appearance in plenary session to report on the latest European and NATO summits, and on relations with Morocco.

The decree law, published today in the BOE, seeks to “limit the economic and social costs of the distortion of a geopolitical nature in the price of gas, tackle the inflationary process at the root and facilitate the adaptation of the economy to this situation of a temporary nature” , as stated in the text that comes into force tomorrow.

While waiting for the final data for April (last month inflation exceeded forecasts in the confirmation) inflation in Spain is already close to 10%. As predicted by several experts for the Economist In the past week, in March it would already reach double digit or if not, it would stay very close.

For Bankinter analysts, the data for March is “much worse than expected and it is a drag on consumer and business confidence”. Based on the preliminary data for March, their estimates suggest that the CPI could stand at 5.5% in December 2022 compared to the forecast of 4.1% On average, it would be around 8% compared to 6.9% previously.