The Consumer Price Index (CPI) increased by 1% in September compared to the previous month, according to data published by the National Statistics Institute (INE). This result supposes an increase of seven tenths in the annual inflation rate, up to 3.4%, which largely responds to the increase in VAT rates and the rise in medicines and therapeutic material.

Core inflation (which excludes energy products and fresh food) also increased seven tenths and stood at 2.1% at the annual rate. This acceleration responds to the evolution of the prices of non-energy industrial goods and services. In contrast, processed food has reduced the annual rate by three tenths (to 2.9%), when compared to September 2011, the month in which there was an increase in tobacco.

Energy products have continued to escalate. In September they were up 13.4% compared to a year earlier, 1.5 points more than August. Fresh foods have registered an annual rate of 2.8% (0.1 points more). The prices of services have risen 1.8% in the annual rate (seven tenths more) and industrial goods have increased 1.3%. This last group has been affected by the increase in VAT and of medicines and therapeutic material, as a result of the exclusion of some of the latter from the National Health System.

Specifically, medicines and therapeutic materials have experienced an increase of 20.7% in their annual rate, compared to 12.4% in August. Equally noteworthy is the rise in the price of automobiles due to the effect of VAT, from 0.5% in the annual rate in August to just above 2% in September. This set of products explains at least two tenths of the seven that the September CPI has increased at an annual rate.

Regarding the monthly rate, the non-energy industrial goods (BINES) chapter has also had an influence, with a 2.4% increase compared to August. It is the result of the 7.5% monthly increase in the prices of medicines and therapeutic materials, clothing and footwear (4.1%) due to the start of the autumn-winter season, and automobiles (2.1%). Energy products (2.1% increase compared to August) and, especially, electric energy and gas (2.5%) and fuels and fuels (2%) have also influenced. To a much lesser extent the feeding has affected (0.5% rise).

On the contrary, it is worth mentioning the month-on-month non-variation in the prices of all services in a month in which they usually fall due to seasonal factors associated with tourism. In September, there was a 2.2% drop in tourism and hospitality prices. These seasonal factors would have offset the price increase that would have resulted from the VAT increase.

On the other hand, the INE has started to publish since September and continuously the CPI for constant taxes (IPC-IC), in accordance with the European methodology. The objective of this indicator is to exclude from the price variation the part that is due to consumption taxes. What is measured is the CPI under the assumption that these taxes have not changed since the reference time.

The result is that in the interannual rate, the CPI-IC has decreased 1.2 points, from 2.6% in August to 1.4% in September. The monthly variation is -0.9%. Both core inflation (-1.1%) and energy (-0.3%) and fresh food (-0.6%) have contributed to the monthly decline. Within the underlying one, services (-2%) and processed foods (-0.7%) stand out. Within services, hotels and accommodation (-14.6%) and restaurants (-1.5%), air transport (-3.2%), hospital services (-10.3%), cultural services and organized trips (-13.9%). Regarding year-on-year rates, core inflation went from 1.3% in August to 0.1% in September. Of note are the slowdowns experienced by services (from 1.1% to -0.3%), processed foods (from 3% to 1.4%), and fuels and fuels (from 11.9% to 10.2%).

The INE has also published the harmonized CPI (IPCA) for September, whose annual rate stands at 3.5%, eight tenths above that registered the previous month. When compared to the estimated annual rate for the euro area as a whole, the differential would be unfavorable to Spain by eight tenths, compared to 0.1 points the previous month.

The evolution of prices in the month of September is explained by the rise in taxes and some products such as medicines. Therefore, it has a transitory nature on the annual inflation rate. Consequently, a certain correction of it can be expected in the coming months. Contributing to this will be the drop in energy prices (electricity, butane and maintenance of the gas rate) that came into effect in October and the necessary moderation in gasoline and diesel. The rest of the components of the CPI maintain an evolution very in line with the current situation of the Spanish economy and allow further improvements in our competitiveness vis-à-vis the outside world.



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