• Processed food, energy products and industrial goods explain the decline
  • The differential with the euro zone 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 recorded 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 have registered an annual rate of -1.7% in February, compared to 0.0% last January. Within this group, its main component, fuels and fuels, has intensified the rate of fall by two and a half points, from -0.7% in the previous month to -3.2%. This moderation results from an inter-monthly decrease of 0.2% in February this year together 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 cost of fish, which has grown by 6.8%, which may respond to the effects of the adverse weather conditions that the fleet held in some days of the month. On the contrary, it is worth noting the moderation of fresh fruits that reduce their annual rate 1.8 percentage points, to -0.7%. The strong rebound that these products registered between May and August of last year continues to be corrected. Potato prices continue to moderate and cut their annual rate one point, from 2.1% in January to 1.1% in February.

Core inflation or more stable core prices declined one tenth in February, 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 of services. BINES reduce their annual rate in February by one tenth, to -0.4%, mainly due to medications and therapeutic material. This item reduces its interannual rate 1.8 percentage points, up to 0.5%. On the contrary, mention the evolution of the prices of clothing and footwear, which increased its annual rate by one tenth, to -0.1%. The services placed their annual rate at 0.0%, compared to -0.1% in the previous month, an increase that is explained by the rubrics of insurance, tourism and hospitality and interurban public transport.

Processed food, including beverages and tobacco, reduces its annual rate four tenths, up to 1.3%, a deceleration that is explained, basically, by the departure of oils and fats, which records 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, such as tobacco, coffee, cocoa and infusions and sugar, has influenced.

The month-on-month stability of the general index responds to setbacks in food and BINES prices that fully compensated for increases in services. Unprocessed foods fell 0.8%, mainly due to sheepmeat (-3.3%) and fresh fruits (-2%) and, to a lesser extent, fresh legumes and 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% due mainly to the decline in clothing and footwear (-1.7%). Finally, the services showed a monthly advance rate of 0.3%, due to 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 recorded a decrease of -0.4%; Melilla has 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 energy rate has been -1.7%, compared to 0.1% in January, and that of unprocessed food 1.2% (0.9% in January) . Within the core of the inflation underlying constant taxes, the prices of BINES stood at -0.4% year-on-year (-0.3% in the previous month), those of processed foods rose 1.2%, compared to 1.5% of the previous month, and those of the services registered a zero annual rate, compared to -0.1% in January.

The INE has also published the harmonized CPI (CPI) 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 zone as a whole (0.8%), the inflation differential continues to be favorable for Spain by 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 continuity of wage moderation. This has a favorable impact on the competitiveness of national production and stimulates exports. It also allows the maintenance of the purchasing power of salaries and pensions, which favors domestic consumption and makes the recovery of production and employment sustainable.

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