• The average annual rate of the CPI stood at -0.2%, which has allowed purchasing power gains
  • Core inflation ends the year at 1% due to the acceleration of service prices

The Consumer Price Index (CPI) increased in December by 1.6% year-on-year, nine tenths more than in November, according to figures published by the National Statistics Institute (INE). It is a tenth above the data advanced by the INE two weeks ago. This acceleration is mainly explained by the evolution of the prices of energy products and, in particular, of fuels and fuels. Throughout 2016, average inflation has been negative again for the third year in a row (-0.2%), which has allowed new earnings from the purchasing power of salaries and pensions.

Energy products prices rose 5.3% year-on-year in December, after the 0.5% decrease recorded in November. This evolution is mainly explained by the behavior of the fuel and fuel item, whose prices accelerated seven points, from -1% to 6% and, to a lesser extent, by the prices of electricity, which increased by 3 , 1 points its growth rate, up to 3.7%.

Food inflation in December stood at 0.8%, four tenths above that of the previous month, due to the acceleration of unprocessed food prices, a point and a half to 2.1%. This evolution responds, mainly, to the increase in prices of fresh vegetables, which have gone from falling 1.1% in November to increasing 7.7% in December. The prices of processed food slowed slightly, one tenth to 0.2% year-on-year.

Core inflation (which excludes unprocessed food and energy, which are the most volatile elements of the CPI) increased two tenths in December, to 1%, due to the acceleration of service prices, four tenths to 1, 6% The prices of processed foods increased with less intensity (0.2%, compared to 0.3% in November), while those for non-energy industrial goods (BINE) maintained the annual growth rate at 0.6 % of the previous two months.

In month-on-month terms, the CPI increased 0.6% in December, compared with the 0.3% decline in the same month of 2015. By components, the prices of energy products rose 3.6%, after the decline of 2 , 2% a year earlier; those of services increased 0.6%, three tenths more than in the same month of 2015; those of the BINE fell 0.6%, as in December of the previous year; and those of feeding increased 0.4%, compared to the stabilization of a year earlier.

Within the food group, prices for unprocessed foods recorded in December 2016 an inter-monthly rate of 1.4%, one and a half points higher than in the same month of 2015, while those for processed foods stabilized, compared to the 0.1% rise a year earlier. Stresses, within the unprocessed food, the notable increase in the prices of fresh vegetables, 7.4% month-on-month, after the decrease of 1.4% in December 2015.

The interannual rate of the CPI increased in December 2016 in all the autonomous communities. The highest increases were recorded in Castilla-La Mancha (1.1 points, up to 1.6%), La Rioja (1.1 points, up to 1.5%) and the Region of Murcia (also 1.1 points , up to 1.6%). The smallest increase, of five tenths, corresponded to the Canary Islands, with an inflation of 1.3%.

The INE has also published the harmonized CPI (CPI) corresponding to the month of December, whose annual variation rate stands at 1.4%, nine tenths higher than that of November. This rate is three tenths higher than the one advanced by Eurostat for the euro zone (1.1%, compared to 0.6% the previous month), resulting in an inflation differential unfavorable to Spain with respect to the three tenth euro zone, after the favorable differential of a tenth of November.

In summary, the year-on-year rate of the CPI stands at 1.6% in December, nine tenths above that of the previous month, acceleration that is largely explained by the evolution of energy product prices and, in particular , of fuels and fuels. The year 2016 closes with a negative annual average CPI rate of -0.2%, which has allowed gains in the purchasing power of salaries and pensions for the third consecutive year.

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