In 2024, the disinflation process will continue. While headline inflation is expected to rise temporarily in the winter months, the disinflation process will intensify further next year, helped by slowing economic momentum. The Spanish economy already cooled sharply in the third quarter of this year and this slowdown is expected to continue in the fourth quarter, causing the economy to start the new year on a weak note. Goods inflation had already cooled sharply, but weakening demand will also further reduce inflation in the Spanish services sector, one of the main drivers of core inflation today. European Commission surveys already show that fewer and fewer Spanish service companies plan to raise prices in the coming months.
Furthermore, the President of the Government, Pedro Sánchez, who has just started his third term, has already announced the adoption or extension of several anti-inflationary measures, such as free public transport for the unemployed and young people, and the extension of the reduced VAT on basic food products. until June 2024. These measures will also put downward pressure on the inflation rate. While average inflation for all of 2023 is likely to reach 3.6%, we expect it to fall to 3.0% on average in 2024.