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The INE reviews January inflation up one tenth to 5.9% and the underlying scale to 7.5%

Together with fuels, clothing and footwear is the group that has contributed the most to the rise in the CPI.

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The INE reviews January inflation up one tenth to 5.9% and the underlying scale to 7.5%

Together with fuels, clothing and footwear is the group that has contributed the most to the rise in the CPI. The INE highlights the evolution of clothing, which has become more expensive by 3.6% compared to January last year, "almost two points more" than in December; and the communications group, whose variation stands at 2.3%, "more than four points above that registered in December, due to the fact that telephone services rise more than in January 2022".

On the other hand, electricity was once again the good news of the CPI -despite the inclusion of the free market in its computation- and caused spending on housing to fall by 8.4%.

Also contributing to the drop, to a lesser extent, was the moderation of 3 tenths of the rise in food and non-alcoholic beverages, up to 15.4%, after the entry into force of the VAT reduction on some foods.

The Department headed by Nadia Calviño has highlighted that the prices of food affected by the VAT reduction fell by 1.6% in January compared to the month of December, in contrast to the 1.4% rise experienced by the rest of the products of the basket not affected by the tax reduction.

Thus, Economy has stressed that there has been a "generalized" drop in foods in which the VAT reduction from 4% to 0% has been applied, such as bread (-0.2%), milk (-1.5 %), eggs (-1.5%), fresh fruits (-4.2%), legumes (-1.1%), potatoes (-1%), flour (-2.3%) and cheese (- 0.7%). In the case of those who have had a VAT reduction from 10% to 5%, the decrease in the prices of olive oil (-1.2%) and pasta (-3.5) stands out.

With the increase registered in the first month of 2023, inflation breaks with five consecutive months of decreases in its interannual rate, in which it fell by more than five points.

The INE maintains the annual variation rate of underlying inflation -index excluding unprocessed food and energy products- at 7.5%, five tenths more than that registered in December and the highest since December 1986.

The economy expects underlying inflation to reflect the decline in general inflation and energy costs and other raw materials in the coming months.

These inflation figures are the first recorded with the new CPI calculation method, which reduces the weight of housing and food, and includes the free electricity market. Starting this year, the main source for estimating the rise in prices will be the National Accounts -the same one used for GDP-, instead of the Family Budget Survey (EPF) as up to now.

The EPF will continue to be the reference index for calculating prices, but not for determining the weight given to the different groups used to calculate the CPI. From the INE they explained a few weeks ago that this change was produced to adapt their methodology to the criteria established by European regulations.

With this new structure, food and non-alcoholic beverages will continue to be the group with the greatest weight when calculating the CPI, but with a reduction in percentage point weighting: from 22.6% to 19.6% of the total.

Housing, which was the second most important value in percentage terms, went from 14.2% to 12.7% and was surpassed by transportation -which went from 13% to 13.8%- and spending on hotels, coffee and restaurants -which rises from 13% to 13.2%-. Also noteworthy is the increase in the weight of leisure and culture from 6.4% in 2022 to 7.9% in 2023, as well as the drop in spending on clothing and footwear, which fell from 6% to 3.9%.

Lastly, the INE has incorporated the free electricity market into the CPI calculation to thus "adequately" represent the evolution of energy prices. To do this, it has used the information provided by more than 80% of the sector.

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