The Consumer Price Index, or CPI, which has just been published by the National Statistics Institute, or INE states that prices fell by 0.3% in the Balearic Islands in March compared to February, which is lower than the National figure of -0.4% and is mainly due to cheaper fuel and electricity.
“The drop in prices registered in March is highly influenced by the drop in the price of oil due to the supply shock that has already been experienced in China as a result of the coronavirus,” said Antoni Riera, Technical Director at Impulse Foundation.
He also pointed out that since China was first to experience the effects of the coronavirus restrictions, it follows that there’s likely to drop even more in April, because almost all activities are paralysed.
“The coronavirus mobility restrictions led to an immediate fall in demand, therefore, consumption and prices fell,” said Riera, but acknowledged that “the decrease in the CPI for March was expected.”
The annual CPI rate stood at 0.1% in March, compared to 1% in February and is the fourth largest in Spain and so far this year prices in the Balearic Islands have fallen by 1.3%.
The most expensive products in the Balearics in March compared to the same period in 2019 were food and non-alcoholic beverages at 2.5%, followed by Hotels, Cafés, Restaurants and Teaching. The biggest fall was in Electricity & Domestic fuels prices which fell by -3.9% and Transportation by -1.7%.
Riera attributed the higher food prices to increased in demand, especially in the days prior to the declaration of the State of Emergency. Long lines at supermarkets and cars full to overflowing became the most repeated images in the first half of March.
The UGT has asked that the coronavirus crisis not be used as an excuse to raise the price of essential products and consumer goods.
The CCOO says this moderation of inflation "is a reflection of the weakness of internal demand", and employers agree.
The CEOE believes that in the coming months and in line with the evolution of oil prices, a significant moderation in inflation is expected.
Food purchases skyrocket
The coronavirus restrictions caused a spectacular increase in food consumption on the Islands, according to a report by the Ministry of Agriculture, Fisheries & Food.
Statistics show that consumption increased by 17%, 37%, 9% and 31% as the weeks passed by and consumers were buying more fruit, vegetables and potatoes.