The Consumer Price Index (CPI) decreased by 0.3% in the interannual rate in July, according to data published by the National Statistics Institute (INE). This reduction in the inflation rate has mainly rested on the most volatile components of the CPI: energy products and unprocessed food; Processed food and services have also contributed to this moderation, but they have done so to a much lesser extent.

Non-Energy Industrial Goods (BINES) have slightly increased their year-on-year rate, although it still remains in negative territory. In relation to the previous month, the general CPI has decreased by 0.9% in July due to seasonal factors related to the summer sales in clothing and footwear.

The interannual rate of unprocessed food prices fell by 1.4 percentage points in July to -5.2%, a moderation that mainly responds to the evolution of various items such as fresh fruit, potatoes and sheep meat and of bird. Its year-on-year rate has moderated significantly, especially in the first two, after discounting the strong rebounds registered a year earlier. Fresh fruits have reduced their annual rate by 5.9 points and potatoes by 5.4 points, down to -15.5% and -25.1%, respectively.

The prices of energy products registered an interannual rate of 0.3% in July, 2.3 percentage points less than in June. This significant slowdown is due to a base effect of both fuels and fuels and the electricity rate. The annual rate of this subclass has dropped from 7.1% in June to 3.8% in July, as a result of a monthly drop of 1.9% in July of the current year and of an advance of 1.2% in one year. before. Fuels and fuels, its main item, have moderated their interannual variation rate by 2 percentage points, down to -0.9%.

Core inflation held steady at 0.0% in July for the third consecutive month. This stability has been due to the fact that the slight moderation of the services and of the processed food has been fully compensated by the opposite evolution of the BINE.

Services moderated their annual inflation in July by one tenth, to 0.2%, largely due to the heading of tourism and hospitality, which reduced its annual rate by three tenths, to 0.2%. This slowdown was mainly due to the organized travel subclass, which reduced its annual rate from 1.2% in June to -1.5%. On the contrary, it is worth mentioning the acceleration of intercity public transport, whose annual rate increased 1.5 percentage points, to 5.8%, as a result of a new rise in air transport (10.9%). BIN prices fell 0.4% in the annual rate, one tenth less than the previous month.

Processed food, including beverages and tobacco, moderated its annual rate in July by three tenths, down to -0.1%. This slowdown is mainly explained by tobacco, which reduces its annual rate by almost 2 percentage points, to 1.2%. To a lesser extent, the moderation of other items such as milk, sugar and mineral water, soft drinks and juices has influenced.

The CPI decreased 0.9% in July compared to the previous month, which is explained by the lower prices of BINES and energy products, which was partially offset by the increase in the cost of services and fresh food, processed food did not vary. Fresh food increased 0.2% in the month, mainly due to fresh fish, which grew 2.1% more expensive, sheep meat (0.7%) and fresh fruits (0.6%).

Services increased by 0.4% in monthly rate, mainly due to tourism and hospitality (1.5%) and, within this heading, by organized travel items (8.7%) and hotels and other accommodation ( 8.3%); as well as for interurban public transport (2.2%), especially for the air transport item (4.6%). The prices of energy products decreased 0.6% in the month, due to the 1.9% drop in the electricity rate and 0.1% in fuels and fuels. BINES prices decreased by 4% month-on-month, mainly due to clothing and footwear, which fell 12.9%, due to the effect of the summer sales.

Of the 17 Autonomous Communities, four registered a year-on-year inflation rate above the national average in July. The most inflationary were: the Balearic Islands (0.1%), Catalonia (0.0%), the Basque Country (-0.1%) and Galicia (-0.2%). In Madrid it has coincided with the national average (-0.3%) and the rest of the communities have lower rates than the national average: Extremadura and Navarra (-1%), Castilla-La Mancha (-0.8%), Murcia (-0.7%), Andalusia (-0.6%), Asturias, Cantabria and Castilla-León (-0.5%) and Aragón, Canarias, Comunidad Valenciana and La Rioja (-0.4%).

The annual rate of the CPI for constant taxes stood at -0.3% in July, as did the general CPI, four tenths lower than the previous month. The underlying constant tax has remained at 0.0%. The annual rate of energy stood at 0.3%, compared to 2.7% in June, and that of unprocessed food at -5.2% (-3.8% in June) . Within the core of inflation underlying constant taxes, BINES prices stood at -0.4% year-on-year (-0.5% in June), processed foods remained stable, compared to the rise in 0.1% the previous month, and those of services increased 0.2%, one tenth less than in the previous month.

The INE has also published the harmonized CPI (IPCA) for July, whose annual rate stands at -0.4%, four tenths lower than the previous month. If this data is compared with the annual rate estimated by Eurostat for the euro area as a whole (0.4%), the inflation differential continues to be favorable to Spain, at 0.8 percentage points, three tenths more favorable than in the last month.

In summary, inflation has decreased in July due to the evolution of the prices of some of the most volatile items of the CPI, such as unprocessed food and energy prices, especially the electricity rate. Therefore, this reduction is considered transitory, and it is estimated that in the coming months it will recover a slightly positive sign. This moderation in prices has a favorable impact on the purchasing power of income and consumption. Likewise, it facilitates the continuation of wage moderation and competitiveness, with the consequent positive impact on exports, facilitating the continuity of the recovery of production and employment.



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