The Consumer Price Index (CPI) in July got some bad news. Pressured by rising petroleum costs and the related increases to other fuel prices, the CPI rose five-tenths of a point in July, putting inflation at 2.7% in August, which is the highest level of the year.
The September VAT increase will not temper the index's rising trend. Among other negative consequences, the price of putting gas in the tank will go up by four cents per liter. This is bad news for consumption and transportation and public accounts. The upward trend will continue, because rising crude oil prices have political consequences in addition to economic ones. The index is expected to finish the year at 3%, adding one more challenge for the Spanish economy to overcome.
