An INE official said the impact of the change in methodology was "not relevant", in line with Funcas think tank chief economist Raymon Torres, who believes the change does not explain the negative upward surprise. "It is bad data," said Torres, who believes that the sharp rise in core inflation is also due to higher processed food prices. Core inflation, which strips out volatile fresh food and energy prices, was 7.5% year-on-year, higher than 7.0% recorded in December, the INE data showed. Calvino said the government hopes core inflation will peak in the first quarter of 2023 and that "the positive path of lower inflation" will continue throughout the year.
Spain's European Union-harmonised 12-month inflation was 5.8%, up from 5.5% in December and above the 4.7% expectation from analysts polled by Reuters. The headline price index had fallen fast over the second half of 2022 from a peak of 10.8% in July to 5.7% in December, the slowest in the euro area. The Spanish data comes as the European Central Bank has all but committed to raising its key rate by half a percentage point this week to 2.5%, but policymakers are expressing different preferences for March depending on their inflation outlooks.
The euro rose slightly after the data was released.
(Reporting by Joao Manuel Mauricio in Gdansk, additional
reporting by Emma Pinedo and Belén Carreño in Madrid, editing by
Inti Landauro, Toby Chopra and Sharon Singleton)
