• The different calendar of Holy Week explains the zero variation in tourism and hospitality
  • Both energy products and industrial goods moderate the fall in annual rate
  • The differential with the euro zone 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 Institute of Statistics (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 recorded increases, of three tenths in the case of energy products and one in Non-Energy Industrial Goods (BINES). In relation 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 rate of decline responds to its main component, fuels and fuels, which has reduced the rate of decline by three tenths, from -3.2% in the previous month to -2.9%.

The annual rate of unprocessed food prices fell 1.2 percentage points in March to 0.0%. This marked 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, legumes and fresh vegetables and potatoes and their preparations have also contributed to this moderation. On the contrary, it should be noted the acceleration of prices of poultry meat that 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 core prices declined one tenth in March, until it was canceled. 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 BINES.

Services reduce their annual rate in March by two tenths, to -0.2%, mainly due to the tourism and hospitality item that reduces its annual rate by 0.6 percentage points until canceled. This moderation responds, to a large extent, to the fact that Holy Week fell last year in March and in the current one, in April.

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

Processed food, including beverages and tobacco, moderates its annual rate by one tenth, up to 1.2%. This deceleration is explained by the item of oils and fats, which records 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, sugar, mineral water and soft drinks and coffee, cocoa and infusions has influenced.

The month-on-month advance of 0.2% in the CPI responds to increases in the prices of BINES and services that easily offset the setbacks in food and energy products. BINES increased 1.2%, mainly due to clothing and footwear that rose 4.2%, due to the fixing of spring and summer prices. It has also influenced the increase in the price of cars (0.5%). 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 rates below the national average. Navarra (-0.7%) and Extremadura (-0.6%) have been the ones with the lowest inflation.

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

The INE has also published the harmonized CPI (CPI) in 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 zone as a whole (0.5%), the inflation differential continues to be favorable for Spain by 0.7 percentage points, one tenth more favorable than in February.

In summary, inflation has fallen one tenth in the month of March, and has become slightly negative. However, this decline responds largely to a timely event such as the different calendar of Holy Week, which was held last year in March and the current one in April, and for the behavior of more volatile prices, such as unprocessed food. Corrected these effects, and taking into account the recovery of private domestic demand, inflation is expected to return to positive, although moderate, rates in the 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 continuity of wage moderation. This has a favorable impact on the competitiveness of national production and exports. It also allows the maintenance of the purchasing power of salaries and pensions, which favors internal consumption, with the consequent accelerating effect on the recovery of production and employment.



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