CEOE estimates that inflation will continue to register negative rates in the coming months


In the month of November, the interannual rate of the Consumer Price Index (CPI) remained at -0.8%, accumulating eight months in negative. Inflation maintains a notable rate of decline, due to the decrease in the prices of energy products and the deceleration of the underlying.

Core inflation continues its deceleration path and stands at 0.2%, one tenth less than the previous month. Analyzing its components, it is observed that they remain at very low or practically zero rates. Thus, the prices of services maintained their variation at 0.1%, the prices of industrial goods without energy products maintained their rate of variation at 0.0%, and processed foods, beverages and tobacco decreased two tenths its interannual variation up to 0.8%.

The prices of unprocessed foods also show a more moderate growth, reducing their rate of variation by more than two percentage points to 2.0%, although they continue to be the most inflationary component of the basket, with the most intense increases being concentrated in the fresh heading, sheep meat and legumes and vegetables.

Energy prices in November slightly decreased their rate of decline. Specifically, the interannual rate in this month of the prices of energy products was -9.5%, compared to -11.1% the previous month and this trend of lessening of the fall is expected to continue in the coming months due to the increase in oil prices. In this sense, the price of Brent oil, after the agreement reached by OPEC + recently, which represents an additional cut in the supply of crude compared to the agreement reached last spring, has been close to 50 dollars / barrel and has been expects it to continue at those levels.

In December, if it remains at that price, the fall in year-on-year terms would still be -27.6%, so that energy will continue to push inflation down, although with less intensity than in previous months.

The Harmonized Consumer Price Index increased one tenth in November, to -0‑.8%, and the average index for the Economic and Monetary Union remained at ‑0.3%, according to the Eurostat advanced indicator. Thus, the negative differential with the euro zone stands at five tenths and has now lasted for two years.

Looking ahead to the coming months, inflation will decrease its fall and will return to positive rates in the first months of 2021, although it will be conditioned by the behavior of oil prices and the fall in demand for some goods and services derived from the coronavirus crisis. In the year 2020 as a whole, the average rate of the CPI will be slightly negative (-0.3%) and in 2021 a growth of around 1.0% is expected.

In this context of weak demand, final prices continue to fall at the same time that companies must continue to assume increases in production costs, so their margins are being sharply reduced.



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