• The differential with the euro zone remains favorable to Spain, at 0.3 points, which ensures competitiveness

The Consumer Price Index (CPI) increased by 0.2% in the annual rate in May, two tenths less than in April, according to data published by the National Statistics Institute (INE). This moderation in the inflation rate responds to food and, especially, to certain items such as oils and fats, fresh legumes and vegetables, fresh fruits and potatoes, which discounted in the current year the strong rebound registered in May 2013. Services have also contributed to moderate inflation and, to a lesser extent, Non-Energy Industrial Goods (BINES) have done so. On the contrary, it is worth mentioning the acceleration in the prices of energy products. Compared to the previous month, the general CPI did not change in May.

The annual rate of unprocessed food prices fell 2.2 percentage points in May to -2.7%. This intense moderation is due to various items such as fresh vegetables, potatoes and fresh fruits, whose annual rate has been significantly moderated, discounting the strong rebounds registered a year earlier as a result of adverse weather conditions in the spring months of 2013. Legumes and vegetables have reduced their annual rate by 8.1 points, potatoes and their preparations by 6.5 points and fresh fruits by 3.8 points. On the contrary, it is worth noting the acceleration in sheep meat prices, which has increased its annual rate by more than three percentage points, to 5.5%, and more moderately, for poultry meat.

The prices of energy products registered an annual rate of 3% in May, almost double that of last April (1.6%). This acceleration is due to the fact that in May 2013 prices decreased significantly compared to the previous month, while in May this year they have increased slightly. Fuels and fuels, its main item, have increased their year-on-year rate of change by 1.8 percentage points, to 0.8%.

Core inflation or the most stable core of prices fell in May by three tenths, down to 0.0%. Its three major components contributed to this deceleration: processed food, BINES and services, but it was the latter that had the most relevant contribution.

The services reduced their annual rate in the month of May by three tenths, up to 0.2%, largely due to the heading of tourism and hospitality, which cuts its annual rate by one percentage point, to 0.5% . Interurban public transport has also contributed, the annual rate of which has been reduced by 2.1 points, to 3.5%, due to the lower cost of air transport. BIN prices fell 0.5% in the annual rate, one tenth more than the previous month.

Processed food, including beverages and tobacco, moderated its annual rate in May two tenths, down to 0.6%. This deceleration is mainly explained by the heading of oils and fats, which records an annual rate of -11.8%, 3.3 points lower than that of April. To a lesser extent, the lower variation rate of other items such as sugar, milk and alcoholic beverages has influenced.

The CPI was stable in May compared to the previous month, which is explained by the lower prices of food, both fresh and processed, and services, which fully offset the upward trend in BINES and energy products. . Fresh food decreased by 0.7% in the month and processed food by 0.1%, mainly as a result of declines of 6.4% in fresh vegetables and legumes, in fresh and frozen fish (1.4%), in potatoes (1.6%) and in oils and fats (2.2%).

Services decreased by 0.3%, mainly due to tourism and hospitality (-1%) and, within this heading, by organized travel items (-7.6%) and hotels and other accommodation (-2%) , as well as for interurban public transport (-1.8%), especially for the air transport item (-3.9%). BIN prices rose 0.7% mom, mainly due to clothing and footwear, which rose 2.3% for the spring and summer season. The prices of energy products rose 0.2% in the month, due to the 0.3% growth of its main item, fuels and fuels.

Of the 17 Autonomous Communities, four registered a year-on-year inflation rate above the national average in May. The most inflationary were: the Balearic Islands (0.6%), Catalonia and the Basque Country (0.5% both) and Galicia (0.4%). In Castilla y León, Comunidad Valenciana and Madrid the annual CPI rate has coincided with the national average (0.2%). The rest of the communities present rates below the national average. Andalusia, Asturias, Cantabria, and La Rioja, with 0.1%, Aragon, Castilla-La Mancha, and the Region of Murcia, with 0%, and the rest with negative inflation (Extremadura, Navarra, and the Canary Islands).

The annual rate of the CPI for constant taxes stood at 0.2% in May, as did the general CPI, two tenths lower than the previous month. The underlying constant tax has decreased two tenths, down to 0.0%. The annual rate of energy was 3%, compared to 1.6% in April, and that of unprocessed food was -2.7% (-0.5% in April). Within the core of inflation underlying constant taxes, BINES prices stood at -0.5% year-on-year (-0.4% in the previous month), processed foods rose 0.5%, compared to 0.7% the previous month, and services increased 0.2%, three tenths less than in April.

The INE has also published the harmonized CPI (IPCA) for May, whose annual rate is also 0.2%, one tenth lower than 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 to Spain, at 0.3 percentage points, one tenth less than in April.

In summary, inflation has moderated two tenths in the month of May due to the evolution of the prices of some of the most volatile items of the CPI, such as food, and some tourism headings, such as organized trips. This price containment is valued positively, since it facilitates the continuation of wage moderation, which has a favorable impact on the competitiveness of our economy and exports. It also allows the purchasing power of wages and pensions to be maintained, which favors domestic consumption, with the consequent favorable effect of the recovery of production and employment.

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