Annual prices increase by 3.5% in the Canary Islands

The Canary Islands rank as the autonomous community with the second highest inflation rate in Spain, trailing only behind Extremadura. Meanwhile, the national average inflation has climbed to 3.2%, while that of the European Union has decreased to 2.4%.

In March, the Consumer Price Index (CPI) in the Canary Islands saw a year-on-year increase of 3.5%, a rise of four tenths from the previous month, as reported by the National Statistics Institute (INE). This uptick marks a reversal from the previous month’s decline. On a monthly basis, the Canary Islands experienced a 0.5% inflation increase, contributing to a cumulative rise of 0.9% for the year.

The sectors showing the most significant annual price increases included restaurants and hotels, which rose by 6.4%, unchanged from the previous month’s year-on-year rate; food and non-alcoholic beverages, up 5.6% (down 0.7 points); alcoholic beverages and tobacco, up 5.2% (down 0.1 points); and education, which saw a 3.1% increase (down 0.4 points). Conversely, the clothing and footwear sector saw a decline, with prices dropping by 0.4% year-on-year, an 0.8 point decrease compared to the previous month’s rate, making it the only category to record a fall.

Annual prices increase by 3.5% in the Canary Islands

Nationally, March saw the CPI rise by 0.8% compared to the previous month, increasing the annual rate by 0.4 points to 3.2%. The average inflation rate for the Monetary Union dropped by two-tenths to 2.4%.

Among Spain’s autonomous communities, the Canary Islands recorded the second highest price increase, following Extremadura at 3.6%. The national increase is largely attributed to rising energy prices due to the normalization of their tax rates after almost three years of reduced VAT. Meanwhile, food price increases decelerated in March, with inflation in this sector dropping by one point to 4.3%, the lowest since November 2021. Core inflation, which excludes unprocessed food and energy, also continued its downward trend, decreasing by two-tenths to 3.3%, marking the lowest rate in two years.

The Ministry of Economy noted that the data reflects the Spanish economy’s capability to balance robust economic growth within the euro area with moderated price increases and continued support for vulnerable populations. According to Carlos Cuerpo, this dynamic enhances the purchasing power of families and the competitiveness of businesses.

Annual prices increase by 3.5% in the Canary Islands

Significant inflation drivers in March included housing, leisure, and culture, and transport sectors. Housing prices rose sharply by more than four points to 1.5%, attributed to a spike in electricity prices compared to a decrease the same month last year. Leisure and culture prices increased by 3.8%, driven by higher package tour costs than in March of the previous year.

Pedro Alfonso from CEOE Tenerife highlights significant challenges for monetary policy, advocating for measures to contain inflation, such as interest rate reductions which could stimulate consumption but potentially drive inflation higher, particularly in Spain where rates are relatively high.

Santiago Sesé, President of the Santa Cruz de Tenerife Chamber of Commerce, views the March CPI rise as cyclical, influenced primarily by increases in electricity prices and kw/h, impacting housing and fuel costs significantly.

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