Inflation falls to its lowest rate in 25 months

Lower inflation has been observed in most categories of goods and services.

Last January the retail price index (RPI) was 3.2% more than it was in the same month a year earlier. This was the lowest inflation rate in 25 months and follows 12 consecutive months of inflation rate drops. In fact, the rate in January was less than half that observed a year earlier.

Inflation has fallen across most product and services categories. The prices of clothing and footwear, transport and communication, as well as recreation and culture, are lower than they were a year ago. At the same time, the price of electricity, water, and fuels has remained stable as a resiult of government intervention.

In January there was a fall in the inflation rate of beverages and tobacco, housing-related goods, as well as medicines and personal care products. In these sectors, the inflation trend has been downwards and is following what is happening in the countries around us.

In contrast, food price inflation has continued to rise to reach 9.1%. This was the fourth month in a row that food prices have accelerated, in contrast to what is happening in the rest of Europe. This is why the Government felt it had to intervene with operators and negotiate with them a reduction in more than 400 products compared to their price in October, which was the first month when these prices started to deviate from the trend in the rest of Europe. This decrease came into effect in February, after which these prices will remain stable at least till Budget Day in October 2024.

If food price inflation starts to follow the trend in international prices, as is the case in the rest of the retail price index, it is expected that the rate of inflation will soon fall below the historical average.

Photo: iStock

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