March Inflation: Electricity Prices Jump As Expected But Core Lower

Spanish preliminary March HICP came in slightly softer than expected at +3.2% Y/Y (vs +3.3% cons and +2.9% prior), with the sequential reading at +1.3% M/M (vs +1.4% cons and +0.4% prior). The national CPI measure came in above expectations at 3.2% Y/Y (vs +3.1% cons; +2.8% prior) and +0.8% M/M (+0.6% cons; +0.4% prior).

• Core CPI undershot expectations, printing at +3.3% Y/Y (vs +3.4% cons; +3.5% prior): the 7th consecutive decline and the lowest value since February 2022.
• The headline rate was driven upward mainly by electricity and fuel prices according to INE, which matches analyst expectations based on an electricity VAT increase from 10% to 21% which came into effect this month.
• Food and non-alcoholic beverages were downside contributors to the headline rate.
• The slight downside surprise on core CPI in particular may marginally bias downward expectations for next week's Eurozone-wide inflation print, but the lack of detail in the report (particularly on services) makes it difficult to draw any firm conclusions other than that there was no upward surprise this month.
• The fact that the print undershot expectations on headline HICP and core CPI but printed firmer than expected on headline CPI could be due to diverging performances within the differing compositions of the two baskets (though we don't have enough detail to be sure), though it might also be related to the fact that the consensus estimates themselves may not be totally consistent (18 analysts submitted an estimate for headline HICP, but just 9 for headline CPI and 5 for core CPI).
• For context, Spain represents 11% of the Eurozone HICP basket in 2024.

MNI, INE