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Inflationary Breadth Narrows, But Services HICP Stays Above 4%

SPAIN DATA

Though the final HICP reading shows Spanish core inflation receded in March, services remained sticky, printing at 4.1% Y/Y (vs 4.0% prior).

  • The print comes after the Spanish services PMI continued to cite wages as a source of inflationary pressure amongst services firms in March.
  • Looking ahead, services expected prices in the March EC survey fell 6.2 points to 20.6, below the 2023 average. This suggests some scope for services HICP to start moving below 4% Y/Y in the coming months.
  • Despite the services stickiness, moderations in processed food inflation (4.7% Y/Y vs 5.3% prior) and non-energy industrial goods (0.8% Y/Y vs 1.5% prior) helped HICP excluding ex unprocessed food and energy fall to 3.4% Y/Y (vs 3.7% prior).
  • Annual energy inflation turned positive for the first time since November 2022, at 1.6% Y/Y (vs -4.6% prior), with beneficial base effects having now fully faded.
  • Spanish inflation breadth nonetheless improved in March, with the share of components with annual rates above 2% falling to 52% (vs 61% prior), the lowest since December 2021.

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Though the final HICP reading shows Spanish core inflation receded in March, services remained sticky, printing at 4.1% Y/Y (vs 4.0% prior).

  • The print comes after the Spanish services PMI continued to cite wages as a source of inflationary pressure amongst services firms in March.
  • Looking ahead, services expected prices in the March EC survey fell 6.2 points to 20.6, below the 2023 average. This suggests some scope for services HICP to start moving below 4% Y/Y in the coming months.
  • Despite the services stickiness, moderations in processed food inflation (4.7% Y/Y vs 5.3% prior) and non-energy industrial goods (0.8% Y/Y vs 1.5% prior) helped HICP excluding ex unprocessed food and energy fall to 3.4% Y/Y (vs 3.7% prior).
  • Annual energy inflation turned positive for the first time since November 2022, at 1.6% Y/Y (vs -4.6% prior), with beneficial base effects having now fully faded.
  • Spanish inflation breadth nonetheless improved in March, with the share of components with annual rates above 2% falling to 52% (vs 61% prior), the lowest since December 2021.