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

The Consumer Price Index (CPI) increased 0.2% in May at an annual rate, two tenths less than in April, according to data published by the National Statistics Institute (INE). This moderation in the rate of inflation responds to food and, in particular, to certain items such as oils and fats, legumes and fresh vegetables, fresh fruits and potatoes, which discount 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 of the prices of energy products. In relation to the previous month, the general CPI has not changed in May.

The annual rate of unprocessed food prices has fallen 2.2 percentage points in May, to -2.7%. This intense moderation is due to various items such as legumes and fresh vegetables, potatoes and fresh fruits, whose annual rate has moderated significantly, discounting the strong rebounds recorded 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 should be noted the acceleration of sheep meat prices, which has increased its annual rate by more than three percentage points, up to 5.5%, and more moderately, of poultry meat.

The prices of energy products have 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 variation rate by 1.8 percentage points, to 0.8%.

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

Services reduced their annual rate in the month of May by three tenths, up to 0.2%, largely due to the tourism and hospitality rubric, which cuts their annual rate by one percentage point, up to 0.5% . It has also contributed interurban public transport, whose annual rate has been reduced 2.1 points, up to 3.5%, due to cheaper air transport. BINES prices fell 0.5% in annual rate, one tenth more than the previous month.

Processed food, including beverages and tobacco, moderates its annual rate in May two tenths, up to 0.6%. This deceleration is mainly explained by the rubric 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 remained stable in May with respect to the previous month, which is explained by the reduction in the prices of food, both fresh and processed, and of services, which fully offset the upward evolution of BINES and energy products . Fresh food decreased by 0.7% in the month and processed by 0.1%, mainly as a result of 6.4% decreases in fresh vegetables and vegetables, in fresh and frozen fish (1.4%), in potatoes (1.6%) and in oils and fats (2.2%).

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

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

The annual rate of the CPI at constant taxes was 0.2% in May, as was the general CPI, two tenths lower than the previous month. The underlying constant tax has decreased two tenths, to 0.0%. The annual rate of energy has been 3%, compared to 1.6% in April, and that of unprocessed food at -2.7% (-0.5% in April). Within the core of the 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% in the previous month, and those in services increased 0.2%, three tenths less than in April.

The INE has also published the harmonized CPI (CPI) 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 zone 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 rubrics, such as organized trips. This price containment is valued positively, as it facilitates the continuity of wage moderation, which has a favorable impact on the competitiveness of our economy and exports. It also allows the maintenance of the purchasing power of salaries and pensions, which favors internal consumption, with the consequent favorable effect of the recovery of production and employment.



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