• Processed food, energy products and industrial goods explain the decline
  • The differential with the euro area improves two tenths, reaching 0.7 points favorable to Spain

The interannual rate of the Consumer Price Index (CPI) was 0.0% in February 2014, two tenths less than the previous month, according to data published today by the National Institute of Statistics (INE). This decrease in the annual rate responds to processed food, energy products (fuels and fuels) and Non-Energy Industrial Goods (BINES). On the other hand, the annual rate of the rest of the major components of the CPI registered increases of three tenths, in the case of unprocessed food, and one, in services. In relation to the previous month, prices have not changed either.

The prices of energy products registered an annual rate of -1.7% in February, compared to 0.0% in January. Within this group, its main component, fuels and fuels, has intensified the rate of decline by two and a half points, from -0.7% the previous month to -3.2%. This moderation is the result of a month-on-month decrease of 0.2% in February of this year coupled with an increase of 2.3% in the same month of 2013. Electricity prices have registered a monthly increase of 0.5%.

The annual rate of unprocessed food prices rises three tenths in February, to 1.2%. This acceleration is mainly due to the increase in the price of fish, which has grown by 6.8%, which may respond to the effects of the adverse weather conditions that kept the fleet moored on some days of the month. Conversely, it is worth noting the moderation of fresh fruits, which reduced their annual rate by 1.8 percentage points, down to -0.7%. This continues to correct the strong rebound that these products registered between May and August last year. Potato prices continue to moderate and cut their annual rate by one point, from 2.1% in January to 1.1% in February.

Core inflation or more stable price core fell in February by one tenth, to 0.1%. This moderation is a consequence of the slowdown in the prices of processed foods and BINES, which has been partially offset by the slight acceleration in services. BINES reduced their annual rate in February by one tenth, down to -0.4%, mainly due to medicines and therapeutic material. This item reduces its interannual rate by 1.8 percentage points, to 0.5%. Conversely, mention the evolution of clothing and footwear prices, which increased their annual rate by one tenth, down to -0.1%. Services placed their annual rate at 0.0%, compared to -0.1% the previous month, an increase explained by the headings of insurance, tourism and hospitality, and intercity public transport.

Processed food, including beverages and tobacco, reduced its annual rate by four tenths, down to 1.3%, a slowdown that is mainly explained by the heading of oils and fats, which recorded an annual rate of -2.3%, 3.6 points lower than the previous month. To a lesser extent, the lower variation rate of other items has influenced, such as tobacco, coffee, cocoa and infusions and sugar.

The month-on-month stability in February of the general index responds to setbacks in the prices of food and BINES that fully offset the increases in services. Unprocessed food fell 0.8%, mainly due to sheep meat (-3.3%) and fresh fruits (-2%) and, to a lesser extent, to fresh vegetables and fresh fish . Processed foods decreased 0.1% as a result of the decrease in oils and fats (-2.8%). BINES fell 0.4% mainly due to the decrease in clothing and footwear (-1.7%). Finally, services showed a monthly growth rate of 0.3%, for tourism and hospitality (0.5%) and interurban public transport (0.8%).

Of the 17 autonomous communities, five have registered a year-on-year inflation rate higher than the national average in February. The most inflationary are the Basque Country (0.5%) and the Balearic Islands (0.4%), followed by Catalonia and Galicia (0.2%) and Cantabria (0.1%). In Madrid, Murcia and La Rioja inflation has been -0.1%; in Castila and León and Ceuta it has coincided with the national average (0%); Extremadura and Navarra record a decrease of -0.4%; Melilla registers the lowest rate (-0.6%) and in the rest of the communities inflation has been -0.2%.

In February, the annual rate of the CPI at constant taxes was 0.0%, two tenths less than that of the previous month, and the underlying rate at constant taxes remained at 0.1%. In the constant tax index, the annual rate of energy was -1.7%, compared to 0.1% in January, and that of unprocessed food was 1.2% (0.9% in January) . Within the core of inflation underlying constant taxes, BINES prices stood at -0.4% year-on-year (-0.3% in the previous month), those of processed foods rose 1.2%, compared to 1.5% in the previous month, and services registered a null annual rate, compared to -0.1% in January.

The INE has also published the harmonized CPI (IPCA) for February, whose annual rate stands at 0.1%, two tenths less than in the previous month. If this data is compared with the annual rate estimated by Eurostat for the euro area as a whole (0.8%), the inflation differential continues to be favorable for Spain at 0.7 percentage points, two tenths more favorable than in January.

In summary, inflation has stabilized in February, which is a positive fact. It allows to improve the differential with the euro zone and facilitates the continuation of the moderation of wages. This has a favorable impact on the competitiveness of national production and is a stimulus for exports. Likewise, it allows the purchasing power of wages and pensions to be maintained, which favors domestic consumption and makes the recovery of production and employment sustainable.

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