• The different calendar of Easter explains the null variation in tourism and hospitality
  • Both energy products and industrial goods moderate the fall in the annual rate
  • The differential with the euro area improves one tenth, reaching 0.7 points favorable to Spain

The interannual rate of the Consumer Price Index (CPI) was -0.1% in March, one tenth less than the previous month, according to data published by the National Statistics Institute (INE). This decrease responds to both processed and unprocessed food and services. 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 energy products and of one in Non-Energy Industrial Goods (BINES). Compared to the previous month, prices have increased 0.2%.

The prices of energy products have registered an annual rate of -1.4% in March, compared to -1.7% last February. This slowdown in the annual fall rate responds to its main component, fuels and fuels, which has reduced this fall rate by three tenths, from -3.2% the previous month to -2.9%.

The annual rate of raw food prices fell 1.2 percentage points in March to 0.0%. This sharp slowdown is mainly due to fresh fish, whose annual rate has moderated from 8.4% in February to 3.2% in March. Other items such as fresh fruits, fresh vegetables and potatoes and their preparations have also contributed to this moderation. On the contrary, it is worth noting the acceleration in poultry meat prices, which have increased their annual rate by 2.2 percentage points, to 0.9%, and other meats such as beef and sheep.

Core inflation or more stable price nuclei decreased in March by one tenth, until it canceled out. This moderation is a consequence of the slowdown in the prices of services and, to a lesser extent, of processed foods, which has been partially offset by the slight acceleration of the BINES.

Services reduced their annual rate in March by two tenths, down to -0.2%, mainly due to the heading of tourism and hospitality which reduced its annual rate by 0.6 percentage points until it was canceled. This moderation responds, to a large extent, to the fact that Easter fell last year in March and this year in April.

On the contrary, mention the evolution of interurban public transport prices, which increases its annual rate almost two percentage points, to 3.2%. The BINES placed its annual variation rate at -0.3%, compared to -0.4% the previous month, an increase that is explained by clothing and footwear, automobiles and medicines, and therapeutic material.

Processed food, including beverages and tobacco, moderates its annual rate one tenth, up to 1.2%. This slowdown is explained by the heading of oils and fats, which recorded an annual rate of -5.1%, 2.8 points lower than the previous month. To a lesser extent, the lower variation rate of other items has influenced, sugar, mineral water and soft drinks and coffee, cocoa and infusions.

The 0.2% month-on-month rise in the CPI responds to increases in the prices of BINES and services that amply offset the setbacks in food and energy products. BINES increased 1.2%, mainly due to clothing and footwear, which rose 4.2%, due to spring and summer price fixing. The increase in car prices (0.5%) has also influenced. Services increased 0.2%, especially due to tourism and hospitality (0.5%) and interurban public transport (1.6%), as well as air transport.

Of the 17 autonomous communities, four have registered a year-on-year inflation rate higher than the national average in March. The most inflationary are the Balearic Islands (0.3%), followed by the Basque Country (0.2%), Catalonia (0.1%) and Galicia (0.0%). In Andalusia, Cantabria and Castilla y León the CPI has coincided with the national average (-0.1%). The rest have lower rates than the national average. Navarra (-0.7%) and Extremadura (-0.6%) were the ones with the lowest inflation.

In March, the annual rate of the CPI at constant taxes was -0.2%, two tenths less than the previous month. The underlying constant tax has decreased one tenth, until canceling. In the constant tax index, the annual rate of energy was -1.4%, compared to -1.7% in February, and that of unprocessed food was 0.0% (1.2% in February ). Within the core of inflation underlying constant taxes, BINES prices stood at -0.3% year-on-year (-0.4% in the previous month), processed food prices rose 1%, compared to 1.2% in the previous month, and services dropped to -0.2%, compared to 0.0% in February.

The INE has also published the harmonized CPI (IPCA) for March, whose annual rate stands at -0.2%, three 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 (0.5%), the inflation differential continues to be favorable for Spain at 0.7 percentage points, one tenth more favorable than in February.

In summary, inflation has decreased one tenth in the month of March, and has become slightly negative. However, this decrease responds to a large extent to a specific event such as the different calendar of Holy Week, which last year was held in March and the current one in April, and due to the behavior of more volatile prices, such as the unprocessed food. Corrected these effects, and taking into account the recovery of private domestic demand, inflation is expected to return to positive rates, albeit moderate, next month.

This price containment is valued positively, since it will allow maintaining or improving the differential with the euro zone and will facilitate the continuation of wage moderation. This has a favorable impact on the competitiveness of national production and exports. Likewise, it allows the purchasing power of wages and pensions to be maintained, which favors domestic consumption, with the consequent accelerator effect on the recovery of production and employment.

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