• Core inflation, which includes services, processed food and industrial goods, remains stable at 0.9%
  • The differential with the euro area increases half a point and stands at 0.8 points favorable to Spain, which encourages competitiveness

The Consumer Price Index (CPI) decreased 0.3% in January in the interannual rate, according to figures published by the National Statistics Institute (INE), as the INE had advanced at the end of last month. The reduction is, therefore, three tenths with respect to the December rate, which is mainly explained by energy products and, in particular, by the reduction in the price of electricity. In relation to the previous month, the general CPI decreased 1.9%, compared to the 1.6% decrease in the same month of 2015.

The prices of energy products registered an interannual rate of -10.3% in January, a drop that is almost three points higher than the previous month (-7.5%). This greater fall is due to electricity, which decreases 13% compared to a year earlier, after the 0.8% increase in the previous month. The heading of fuels and fuels continues to moderate the rate of decline, almost a point and a half to -9.2%, in line with the evolution of oil prices. The annual rate of change in the prices of unprocessed food increased eight tenths in January, to 3.3%. This acceleration responds, to a large extent, to fresh fruits.

Core inflation (excluding the most volatile CPI elements, fresh food and energy) remained at 0.9% in January, the same as the previous month. Its three major components contributed to this stabilization. Specifically, processed food and services, which kept their annual rate unchanged from that of December, at 1.4% and 1%, respectively, and BINE (non-energy industrial goods), which reduced their rate annual one tenth, up to 0.5%. The slight slowdown in BINE prices is due to the lower cost of medicines and pharmaceuticals and, to a lesser extent, to cars and clothing and footwear.

In month-on-month terms, the CPI decreased 1.9% in January, compared to the 1.6% drop in the same month of 2015. This decrease is explained by the lower cost of energy products, especially electricity. BINEs have also influenced, mainly due to the seasonal fall in clothing and footwear and, to a lesser extent, services, particularly tourism and hospitality. Unprocessed food prices increased 1.3% compared to December, highlighting the rise in fresh fish prices, partially offset by the decrease in the price of fresh vegetables. The prices of processed food increased 0.1% in January.

Energy products registered a 6.2% drop in January, as a result of a 4.5% decrease in fuels and fuels and a 10.6% decrease in the electricity rate. BINE prices decreased by 4.8% compared to the previous month, mainly due to the seasonal decline in clothing and footwear (-15.3%). Service prices stabilized in January as the seasonal decline in organized travel (-8.5%) was offset by the increase in intercity public transport (1.2%).

The annual CPI rate in January decreased in all the autonomous communities, except in Cantabria and Navarra, where it remained stable. They registered rates higher than the Basque Country national average (0.1%), Catalonia (0%), the Balearic Islands and Navarra (-0.1%) and Aragon, La Rioja, Madrid and Murcia (-0.2%). The rest of the autonomous communities presented lower than average rates, the lowest corresponding to Melilla and the Canary Islands (-0.7%). The annual rate of the CPI for constant taxes stood at -0.3% in January, as did the general CPI.

The INE has also published the harmonized CPI (IPCA) for the month of January, whose annual rate stands at -0.4%, compared to -0.1% the previous month. If this rate is compared with that estimated by Eurostat for the euro area as a whole in January (0.4%), the inflation differential favorable to Spain widens half a point, standing at -0.8 percentage points.

In summary, the annual variation rate of the CPI has decreased in January due to the evolution of the prices of energy products and, in particular, of electricity. Core inflation has remained at 0.9%, as a consequence of the practical stabilization of prices in its three main components. The inflation differential continues to be favorable to Spain against the euro zone, favoring competitiveness gains and boosting our exports.

The INE updated in January the weights of the different items that make up the CPI shopping basket, as is usual every year in that month. The modifications have been small, with BINE and services being the groups that have increased their weight in the shopping basket: 2% the first and 1.2% the second. These changes have occurred to the detriment of the weight loss of energy products (-5.9%), unprocessed food (-2.9%) and processed food (-0.4%).

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