• The underlying rate, which excludes the most volatile elements of the CPI, remains at 0.8%
  • The inflation differential with respect to the euro area is favorable to Spain by two tenths

The Consumer Price Index (CPI) increased in December 2017 by 1.1% year-on-year, according to figures published by the National Statistics Institute (INE), a rate one tenth lower than that advanced by the INE at the end of last month (1.2%) and six tenths to that registered in November (1.7%). This evolution is mainly explained by the slowdown in the prices of energy products and, to a lesser extent, in unprocessed food and services. In month-on-month terms, the CPI registered a zero variation rate in December 2017, compared to the 0.6% advance in the same month of 2016.

The prices of energy products increased 2.6% year-on-year in December 2017, 3.4 points less than in November, mainly due to the slowdown in the prices of fuels and lubricants. These went from registering a rate of 6.7% year-on-year in November to 3% in December. And, to a lesser extent, it is also due to the drop in electricity prices, of 0.2%, after registering a 3.5% increase in November. For their part, gas prices slowed their growth rate by three tenths, to 6.8%.

Food inflation stood at 1.7% in December, five tenths lower than the previous month. The prices of unprocessed food grew by 2.8%, 1.5 points less than in the previous month, due to the deceleration in the prices of fresh fruits, from 3.9 points to 4.1%, and of fresh legumes and vegetables, which went from growing 7.5% in November to 3.3% in December. Inflation for processed food, beverages and tobacco remained at 1.2%.

Core inflation (which excludes unprocessed food and energy products, the most volatile elements of the CPI) remained at 0.8% in December. Service prices slowed two tenths, to 1.3% year-on-year, due to tourism and hospitality and, specifically, to tourist packages, whose prices went from growing 5.8% in November to falling 1, 2% in December. For its part, the year-on-year rate of change in the prices of non-energy industrial goods (BINE) remained at -0.3%.

In month-on-month terms, the CPI registered a zero variation rate in December 2017, six tenths lower than that registered in the same month of 2016. By component, the prices of energy products increased 0.3%, compared to advance of 3.6% in December 2016; those of food remained stable, compared to the 0.4% increase in the same month of 2016; those of services increased 0.4%, two tenths less than in the same period of the previous year; and those of BINE decreased 0.6%, as in December 2016.

Within the food group, the prices of unprocessed food registered a month-on-month rate of -0.2% in December 2017 (1.4% in the same month of 2016), and those of processed foods remained stable, just like a year earlier.

The inflation rate decreased in December compared to that of November in all the autonomous communities. The greatest decreases occurred in La Rioja (0.6%), Aragón (0.9%), Castilla y León (1%) and Catalonia (1.2%), with drops of eight tenths in the first and seven tenths in the rest. The Community of Madrid (1.2%) is the one with the smallest drop in its annual rate, with a decrease of three tenths.

The annual rate of the CPI at constant taxes stood at 1.1% in December, the same as that registered by the general CPI.

The INE has also published the harmonized CPI (IPCA) for the month of December, whose interannual rate stands at 1.2%, six tenths lower than in November. For its part, the rate advanced by Eurostat for the euro area as a whole in December is 1.4%, thus resulting in a favorable inflation differential for Spain with respect to the euro area of ​​two tenths, compared to the unfavorable spreads registered at throughout the previous twelve months.

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