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

The Consumer Price Index (CPI) registered an inter-monthly increase of 0.4% in October, significantly lower than a year earlier (0.9%). Consequently, the interannual rate has decreased 0.4 percentage points compared to that of September, reaching -0.1%, according to data published today by the National Institute of Statistics (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. Within these, the upward step of the university rates of October 2012 has been discounted, as well as some residual effects of the VAT increase of 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 of the last twelve months from -2.3% last September to -2.5% in October, as a result of the moderation of the price of gasoline and diesel On the contrary, the rise in the electricity tariff for domestic uses has influenced with a monthly price increase of 2.7%.

On the other hand, the annual rate of unprocessed foods has declined sharply, by 1.9 percentage points, to 0.9%, due among other factors to the intense moderation of the prices of fresh fruits. This rubric has reduced its annual rate by 6 percentage points, up to 6%. With this result, the strong rebound that these products registered in the May-August period of the current year is still corrected, the latter month in which it reached an annual rate of 26%. The potato is still the most inflationary item in this group, with an annual rate of 12.4%, despite the moderation recorded in the last three months. It is also worth mentioning the moderation of fresh vegetables 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, 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, up to 0.0%, a moderation that has responded, to a large extent, to the upward step discount of the rise in university rates in October 2012. The epigraph of university education has from 22.3% in September to 3.2% in October. It has also influenced the delayed effect of the rise in VAT rates in September 2012. And, finally, 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 impact close to two tenths on the global inflation rate. With less incidence, highlight the evolution of leisure and culture related services, 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 September 3% to 2.7%. This deceleration responds, fundamentally, to items such as sugar, which reduces its annual rate by almost 3 points (up 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 inter-monthly increase of 0.4% in the general index is due, in particular, to BINES (non-energy industrial goods), which increase by 3%. This has been due to the departure of clothing and footwear that rises 10.8%, a rise that has a seasonal nature derived from the start of the autumn-winter season. Processed food increased 0.2%, as a result of the increase in milk and milk products. Also noteworthy monthly increases were the price of electricity (2.7%) and university fees (3.2%). On the contrary, 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 accommodations (-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, to -0.2%, and the underlying rate at constant taxes fell half a percentage point, to 0.2%. In the constant tax index, the annual energy rate was -3.1% (-4% last month) and that of fresh food, 0.9% (2.9% in September). Within the core of the inflation underlying constant taxes, BINES prices remained at -0.8% year-on-year, processed food rose 2.5% (2.8% last month) and the prices of Services did not vary from a year earlier (0.9% in September).

The INE has also published the harmonized CPI (IPCA) for October, whose annual rate is 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 zone 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 October, inflation has fallen one tenth in the annual rate, in line with the data anticipated by the INE at the end of October. The result of this month reflects the influence of transitory elements linked to unprocessed food and the exhaustion of the step effects of fiscal measures adopted in 2012. This moderation of prices has positive effects on the purchasing power of pensions and wages, with the consequent impact that favors consumption. In addition, it facilitates improvements in competitiveness, exports and economic recovery. For the coming months, moderation of prices is expected to continue, with reduced variation rates, which will affect the correction of one of the traditional imbalances of the Spanish economy.

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