• The decrease is due to the lowering of non-energy industrial goods and the lower cost of energy products.
  • Core inflation also decreases three tenths, thanks to the moderation of non-energy industrial goods

The Consumer Price Index (CPI) registered a month-on-month decrease of 0.5% in July, compared with a 0.2% decline from a year earlier. Consequently, the interannual rate has decreased three tenths percent, up to 1.8%, according to data published today by the National Statistics Institute (INE). This fall in the annual inflation rate is mainly explained by the lowering of non-energy industrial goods (BINES), whose prices have registered a decline in July this year of much greater intensity than in the same month last year. A second contribution, of lesser amount, comes from energy products, because this group has recorded a significantly lower rise in July of this year than in the same month last year..

The annual rate of energy products has decreased to -0.4% from 1% last June, due to the evolution of its main item, fuels and fuels. That annual rate has been reduced from 3.8% last June to 2.6% in July. This heading has also influenced the relatively more favorable behavior with respect to last year of the prices of electricity and gas, which has caused the heading of heating, lighting and water distribution to experience an annual decrease of -2.5% , when in the month of June it was -0.4%.

For its part, the annual rate of fresh food has continued to increase by more than 2 percentage points, up to 7.4%. This new rebound is due to the acceleration of the prices of potatoes and their preparations, and of fresh fruits, whose annual rates have increased to 37.3% and 22.2%, respectively. On the contrary, it is worth mentioning fish whose annual rate shows a 0.7% decrease.

Core inflation or stable price core has also decreased three tenths, to 1.7%, which has responded exclusively to the moderation of BINES inflation that has largely offset the increase in the annual rate of processed food , given the stability of service inflation. The annual rate of BINES has fallen from 1.3 percentage points since June, to 0.2%, as a result of the fact that the departure of medicines and therapeutic material has fallen from 27.4% to 6.4%. This reduction responds to the bullish step discount that led to the modification of the rules of the pharmaceutical co-payment in July 2012.

For its part, the item of processed food, beverages and tobacco increases in annual rate from 3% in June to 3.4%. This acceleration is mainly due to the increase in the price of tobacco, which stands at an annual rate of 7.1% due to an increase in taxation, 2.6 percentage points more than in June, although oils and fats, with a 23.9% annual rate continue to concentrate the main inflationary tensions of this group. The services maintain their annual rate at 1.9%. Within this group, the annual intercity public transport rate was reduced by 2 percentage points, up to 3.4%. On the contrary, the communications behaved, whose annual rate went from -4% in the last month to -3.4% in July and to a lesser extent tourism and hospitality, by increasing its annual rate by 1 tenth to 1, two%. The most inflationary item was that of university education (22.3%), which practically maintained its rate, having not yet discounted the 2012 level.

The monthly drop in the general index responds to BINES, which fell 4.1%, due to the departure of clothing and footwear that decreased 12.6% due to the effect of summer sales. To a lesser extent, the communications item that registered a 1.2% drop has contributed. On the contrary, it is worth mentioning the increase in fuels and fuels (2%), tourism and hospitality (1.9%) – these last two with a strong seasonal component – and unprocessed foods (1.6%), as a result of increases in fresh fruits (7.6%) and potatoes and preparations (3.9%).

The autonomous communities with the highest annual inflation rate in July were Cantabria (2.6%), Murcia (2.3%) and the Basque Country (2.2%) and the least inflationary communities were Melilla (0.2%) , Canary Islands (0.6%) and Ceuta (0.9%).

In July, the annual rate of the CPI for constant taxes decreased three tenths, to -0.2%, and the underlying rate also decreased three tenths, to -0.3%. In the constant tax index, the annual energy rate was -3.1% (-1.8% last month) and that of fresh food 6.3% (4.3% in June). Within the core of inflation underlying constant taxes, BINES prices fell 1.9% (-0.7% in June), processed food rose 1.8% (1.7% last month) and service prices fell 0.1% (as in June).

The INE has also published the harmonized CPI (CPI) for July, whose annual rate stands at 1.9%, 0.3 points below that of the previous month. If this data is compared with the annual rate estimated by Eurostat for the whole euro zone (1.6%), the differential unfavorable to Spain would decrease by three tenths, to stand at 0.3 points.

In short, there is a fall in the monthly and annual rates of the price index, as well as in core inflation. It also improves the differential with the euro zone. Therefore, the discount of the successive upward price steps that the fiscal consolidation measures generated in 2012 begins to occur and it is expected that this process will continue in the coming months. The consequent reduction in the rate of inflation, together with the continuity in wage moderation, will continue the recovery of competitiveness vis-à-vis our business partners, favoring the dynamism of exports, and the recovery of production and employment.



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