• The CPI moderation responds to unprocessed food, telephone services and organized travel
  • The monthly rate increases four tenths due to the prices of clothing and footwear and processed foods
  • The differential with the euro zone becomes one tenth more favorable to Spain and stands at 0.7 points

The Consumer Price Index (CPI) registered a month-on-month increase of 0.4% in October, significantly less than a year earlier (0.9%). Consequently, the interannual rate has decreased 0.4 percentage points with respect to that of September, to stand at -0.1%, according to data published today by the National Statistics Institute (INE). It is the lowest annual rate since October 2009.

This fall in inflation has been mainly due to food, both processed and unprocessed, as well as services. Among these, the upward step of university rates from October 2012 has been discounted, as well as some residual effects of the VAT increase in September last year. The rest of the major components of the CPI have maintained their inflation rate, such as non-energy industrial goods, or have increased it, such as energy products.

Energy products have registered an annual rate of -2.7%, compared to -3.7% last September. Within these, its main component, fuels and fuels, reduced its rate in the last twelve months from -2.3% last September to -2.5% in October, as a result of the moderation in the price of gasoline and diesel. On the contrary, the increase in the electricity rate for domestic uses has influenced with an increase in monthly prices of 2.7%.

For its part, the annual rate of unprocessed food has fallen sharply once again, by 1.9 percentage points, to 0.9%, due, among other factors, to the intense moderation in the prices of fresh fruits. This heading has reduced its annual rate by 6 percentage points, up to 6%. This result continues to correct the strong rebound that these products registered in the May-August period of the current year, the latter month in which it reached an annual rate of 26%. Potatoes continue to be the most inflationary item in this group, with an annual rate of 12.4%, despite the moderation registered in the last three months. It is also worth mentioning the moderation of fresh legumes and vegetables, with a record of -5.8% in September, which represents a rate 1.2 points lower than last month.

Core inflation or stable price core has moderated six tenths, down to 0.2%, a figure not reached since May 2010. This evolution has been mainly due to the prices of services and, to a lesser extent, of processed foods. The services have reduced their annual rate by one point, to 0.0%, a moderation that has responded, to a large extent, to the reduction of the bullish step of the rise in university fees in October 2012. The heading of university education has It went from 22.3% in September to 3.2% in October. The delayed effect of the rise in VAT rates in September 2012 has also played a role, and, lastly, the intensification of the drop in the prices of telephone services, by almost two percentage points, from -5.9% from the previous month to -7.5%, which has had an effect of close to two tenths in the global inflation rate. With a lower incidence, the evolution of services related to leisure and culture should be highlighted, from 0.1% in September to -0.8% in October, and other services, from 1.3% last month to 0.5% in October. .

For its part, processed food, beverages and tobacco reduces its annual rate, from 3% in September to 2.7%. This deceleration responds, fundamentally, to items such as sugar, which reduces its annual rate by almost 3 points (down to -3.3%), to the moderation of almost 6 points in the prices of oils and fats (up to 15 , 2%) and, to a lesser extent, other items such as mineral water, soft drinks and juices and alcoholic beverages.

The 0.4% month-on-month increase in the general index is mainly due to BINES (non-energy industrial goods), which increased by 3%. This was due to the item of clothing and footwear increasing by 10.8%, an increase that is seasonal due to the start of the autumn-winter season. The processed food increased by 0.2%, as a result of the rising cost of milk and dairy products. Also notable monthly increases were the price of electricity (2.7%) and university fees (3.2%). Conversely, various components of unprocessed food influenced, such as fresh fruits (-5.7%), potatoes and preparations (-6.5%) and fresh fish (-1.2%), as well as organized travel ( -4.9%), fuels and lubricants (-2.3%) and hotels and other accommodation (-5.3%), although the latter with an important seasonal component.

Among the 17 autonomous communities, 12 have registered a negative inflation rate. The Canary Islands (-0.6%) and Navarra (-0.5%) stand out. Aragon has registered zero inflation and in the rest inflation has been slightly positive, especially Cantabria (0.4%) and the Basque Country (0.4%). In Ceuta and Melilla inflation has been -0.3% and -1%, respectively.

In October, the annual rate of the CPI at constant taxes decreased five tenths, down to -0.2%, and the underlying rate at constant taxes fell half a percentage point, to stand at 0.2%. In the constant tax index, the annual rate of energy was -3.1% (-4% last month) and that of fresh food, 0.9% (2.9% in September). Within the core of inflation underlying constant taxes, BINES prices remained at -0.8% year-on-year, processed foods rose 2.5% (2.8% last month) and services did not change compared to a year earlier (0.9% in September).

The INE has also published the harmonized CPI (IPCA) for October, whose annual rate stands at 0.0%, half a point 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 (0.7%), the differential continues to be favorable for Spain, one tenth more than in September, up to 0.7 points.

In summary, in the month of October inflation fell by one tenth in the annual rate, in line with the data anticipated by the INE at the end of October. This month's result reflects the influence of transitory elements linked to unprocessed food and the exhaustion of the step effects of fiscal measures adopted in 2012. This price moderation has positive effects on the purchasing power of pensions and wages, with the consequent favorable impact of consumption. In addition, it facilitates improvements in competitiveness, exports and economic recovery. For the next few months, the moderation of prices is expected to continue, with low variation rates, which will affect the correction of one of the traditional imbalances of the Spanish economy.

Source of the new