• Core inflation falls one tenth, down to 0.6%
  • Spain's favorable differential with respect to the euro area remains at one percentage point

The Consumer Price Index (CPI) decreased in June by 0.8% year-on-year, a fall two tenths lower than that of May, according to figures published by the National Statistics Institute (INE). This data coincides with that advanced by the INE at the end of last month. The lower year-on-year decrease in the CPI is due to the moderation in the rate of decline in energy prices and, in particular, in fuels and fuels and electricity. In month-on-month rate, the general CPI increased 0.5% in June, two tenths more than in the same month last year.

The prices of energy products registered a year-on-year drop of 11.7% in June, 2.3 percentage points lower than in May (-14%). The slower rate of decline was due both to electricity (which moderated the intensity of the fall almost three points, down to -13.5%) and to fuels and fuels (which moderated it more than two points, down to -11, 2%). At the same time, the behavior of this last heading is a consequence of the smaller decrease of its two components: gas, which has gone from registering a rate of -12.6% in May to -11.6% in June, and fuels and lubricants, which have reduced the fall rate by more than two points, down to -10.4%.

Food inflation stood at 1.4% in June, two tenths lower than the previous month, due to the evolution of both the prices of unprocessed food, whose rate has decreased three tenths to stand at the 2.3%, as of processed foods, which registered a rate of 1% in June, one tenth lower than that of May. Within unprocessed food, the slower rate of year-on-year increase in fresh fruit prices stands out (6.1%, compared to 6.8% in May).

Core inflation (excluding the most volatile elements of the CPI, fresh food and energy) moderated in June by one tenth, to 0.6%, as a result of the slowdown in the prices of processed foods (1%, one tenth less than the previous month), of non-energy industrial goods (BINE, 0.3%, one tenth less than in May) and services (0.7%, rate one tenth lower than the previous month). Within services, a disparate behavior by components is observed. While the rate of change in tourism and hospitality prices remains stable at 0.3%, that of interurban public transport increases 1.2 percentage points, down to -2%.

In month-on-month terms, the CPI increased 0.5% in June, two tenths more than in the same month of 2015. This acceleration was due to the fact that the prices of energy products grew 3.5% month-on-month, 2.8 points percentage more than in the same month last year. In contrast, the remaining components of the general CPI registered month-on-month rates lower or equal to those of a year earlier in June. BINE prices recorded a month-on-month drop of 0.3%, one tenth higher than that of June 2015, and food prices increased 0.2% (0.4% a year earlier), due to both unprocessed food (0.9%, compared to 1.3% a year earlier), as well as processed food (-0.1%, compared to 0.1% in June 2015). Among the unprocessed foods, the moderation in the rise in the prices of fresh fruits stands out (6.5% in June 2016 compared to 7.3% a year earlier).

On the other hand, the prices of services grew by 0.3% month-on-month, as in June 2015, as a result of uneven behavior among its components, highlighting the evolution of prices for interurban public transport, which increased by 0, 9% in June this year, compared to the decrease of 0.3% in the same month last year.

The annual rate of the CPI has increased in June in all the autonomous communities. Seven of them registered lower rates than the national average, the lowest corresponding to Castilla-La Mancha, Castilla y León and Cantabria (-1.1% in the three cases). Andalusia, the Balearic Islands, Extremadura, Madrid and Murcia registered the same rate as the national CPI (-0.8%). Among the communities with rates above the national average, the Basque Country and Catalonia registered the highest rates (-0.5% both). The annual rate of the CPI for constant taxes stood at -0.8% in June, as did the general CPI.

The INE has also published the harmonized CPI (IPCA) corresponding to the month of June, whose annual rate stands at -0.9%, two tenths higher than the previous month. If compared to that advanced by Eurostat for the euro area as a whole in that month (0.1%), the inflation differential favorable to Spain remains at one percentage point.

In summary, the interannual rate of the CPI has increased two tenths in June with respect to that of May, due to the moderation in the fall in the price of energy products. The inflation differential favorable to Spain vis-à-vis the euro area remains at one percentage point for the fourth consecutive month, with the consequent favorable effects on competitiveness and exports.

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