• The September CPI containment responds to all components, especially fruits and vegetables
  • The differential with the euro zone becomes favorable to Spain by 0.6 points, according to Eurostat estimation

The Consumer Price Index (CPI) registered a month-on-month decrease of 0.2% in September, compared to the 1% advance a year earlier. Consequently, the year-on-year rate has decreased 1.2 percentage points compared to that of August, to 0.3%, according to data published today by the National Statistics Institute (INE). It is the lowest annual rate since November 2009.

All the major components of the CPI contributed to this significant drop in inflation, especially unprocessed food, mainly due to the decrease in fruits and vegetables (-14.9% monthly). The step effect derived from the rise in VAT rates in September 2012 and the exclusion of various medicines from the financing of the National Health System have also influenced.

The energy products They have registered an annual rate of -3.7%, compared to -2.2% last August. Within these, its main component, fuels and fuels, reduced its annual rate from -1.1% last August to -2.3% in September, as a result of the moderation in the price of gasoline and diesel.

For its part, the annual rate of unprocessed food it has decreased notably, 4.8 percentage points, to 2.8%, due to the intense moderation in the prices of fresh fruits. These have reduced their annual rate almost 14 percentage points, to 12%. With this result, part of the upturn that has been registered in these products since last spring is corrected. Potatoes continue to be the most inflationary item in this group, with an annual rate of 20.8%, despite the reduction of 10.4 points compared to August. On the contrary, it is worth mentioning the moderation of fresh vegetables and sheep meat, with annual rates of -4.6% and -4.1%, respectively.

The Underlying inflation The stable core of prices has recorded a significant decrease of eight tenths, up to 0.8%, due to the moderation in the prices of Non-Energy Industrial Goods (BINES) and services and, to a lesser extent, of processed foods. The BINES annual rate has decreased 1.2 percentage points since August, down to -0.8%. It is mainly the result of the aforementioned discount of the VAT upward step in September 2012 and the one corresponding to the rise in the heading of medicines and therapeutic material from a year earlier, the latter heading which has moderated its annual rate 7.6 points, up to 0.3%.

The services they have reduced their annual rate by seven tenths, down to 1%, a moderation that has responded to most of their items, which now discount the effect of the VAT increase a year earlier; the rubric communications It is the one that shows a greater fall, with an annual rate of -5.9%, 2.5 points less than the previous month. For its part, processed food, beverages and tobacco reduces its annual rate, from 3.3% in August to 3%. This deceleration responds, fundamentally, to the items in which the increase in VAT a year earlier was most noticeable, such as alcoholic beverages, coffee, cocoa and herbal teas, sugar, and other food preparations. Oil and fat prices, despite the moderation in recent months, continue to lead inflationary tensions in this group, registering an annual rate of 21.4%, 1.8 percentage points lower than in August.

The monthly decrease of two tenths of the general index is due, especially, to fresh food and services. The former decreased by 4%, mainly due to the drop registered in fresh fruits (-14.9%). Services reduced their prices by 0.8%, due to the fall of their main item, tourism and hospitality, which fell by 2.5%. On the contrary, it is worth mentioning the rise in clothing and footwear (4.6%), which is seasonal in view of the new autumn winter campaign, and in pork (1.2%), sheep ( 1%), beef (1%) and poultry (-0.2%).

All the Autonomous Communities have registered falls in the annual inflation rates. The Autonomous Communities with the highest year-on-year inflation rate in September were Cantabria (0.8%), the Basque Country (0.7%), Murcia (0.6%) and Castilla y León (0.6%). The least inflationary communities were Melilla (-0.7%), Canarias (-0.4%), Navarra and Ceuta, both with zero inflation.

In September, the annual rate of the CPI at constant taxes increased eight tenths, to 0.3%, and the underlying rate at constant taxes rose 1.1 percentage points, to stand at 0.7%. In the constant tax index, the annual rate of energy was -4% (-4.8% last month) and that of fresh food was 2.9% (6.5% in August). Within the core of inflation underlying constant taxes, BIN prices fell by 0.8% year-on-year (-1.8% in August), processed foods rose by 2.8% (1.9% last month ) and service prices increased 0.9% (-0.3% in August).

The INE has also published the harmonized CPI (IPCA) for September, whose annual rate stands at 0.5%, 1.1 points below that of the previous month. If this data is compared with the annual rate estimated by Eurostat for the euro area as a whole (1.1%), the differential becomes favorable for Spain at 0.6 points, compared to 0.3 unfavorable in last August .

In short, in September there was a significant drop in inflation, as expected, so that the year is expected to close below 1%. This result, if confirmed, will mean the correction of one of the traditional imbalances in the Spanish economy. The containment of the inflation rate, together with the expected continuity in the moderation of wages, will allow national production to continue to gain competitiveness, with the consequent positive impact on exports, wealth creation and employment.



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