• Core inflation increases two tenths, up to 0.5%, for services, processed food and industrial goods
  • The differential with the euro zone remains favorable to Spain at 0.6 points, indicating improvements in competitiveness

The Consumer Price Index (CPI) decreased 0.2% in May in the interannual rate, according to figures published by the National Statistics Institute (INE). This rate coincides with that advanced by the INE at the end of last month and is four tenths higher than that of April. This acceleration in prices has been reflected in the main items of the CPI, especially in unprocessed food and energy products, the most volatile elements in the general index. Compared to a month earlier, prices rose 0.5%, especially for energy and fresh food.

The prices of energy products registered an interannual rate of -6.4% in May, eight tenths higher than the previous month. This slowdown in the fall is due to the heading of fuels and fuels, which moderated the rate of decline by 1.5 points, to –7.7%, due to the lower drop in the price of fuels and lubricants (-7, 4%, compared to -9.5% the previous month). The interannual variation rate of the prices of unprocessed food increased 2.1 points in May, to 2.3%. This acceleration is mainly due to fresh fruits and, to a lesser extent, to the heading of fresh vegetables.

Core inflation (which excludes the most volatile elements of the CPI, such as fresh food and energy) rose two tenths in May, to 0.5%. This increase responds to the upward behavior of inflation in services, processed food and non-energy industrial goods. Services accelerate three tenths, up to 0.6%, processed food two tenths, up to 0.9%, and non-energy industrial goods one tenth, up to 0.1%.

Within the services group, the highest inflation rate responded to the interurban public transport headings, whose rate stood at 1.4% after the decrease of 1.5% the previous month; that of telephone services, which moderates, reduces the intensity of the fall in half, to 1.7%; and tourism and hospitality, whose annual rate increased by half a point, to 1.1%.

The prices of non-energy industrial goods increased their annual rate one tenth in May, to 0.1%. The slightly bullish evolution responds to the behavior of clothing and footwear and automobile prices. Processed food, including beverages and tobacco, registered a rate of 0.9%, compared to 0.7% the previous month, an increase explained mainly by the rise in the price of fresh fruits, which increased by 6% YoY, after the 1.2% decrease in April.

In month-on-month terms, the CPI increased 0.5% in May, after stabilizing in the same month of 2014. This advance is explained by the increase in the cost of all its components, especially the most volatile, raw food and energy. The prices of unprocessed food grew 1.4% month-on-month, compared to the decrease of 0.7% in the same month of 2014, largely due to the rebound in fresh fruits (9% after the 1.6% increase May last year). Energy products grew 1% mom, eight tenths more than a year earlier. For their part, the prices of non-energy industrial goods increased by 0.9% compared to the previous month, a rate two tenths higher than that of a year earlier, and those of services grew 0.1% in May compared to the month preceding, after the decrease of 0.3% in the same month of 2014.

The annual CPI rate in May increased in all the autonomous communities. Inflation rates above the national average were registered in seven of them: Balearic Islands (0.2%), Catalonia (0.1%), the Basque Country (0%), the Valencian Community, La Rioja and Madrid (-0, 1% in all of them). Andalusia and Navarra showed an inflation rate of -0.2%, the same as the national average, Murcia (-0.3%), Aragon, Asturias, Cantabria and Galicia registered a rate of -0.4%, Castilla y León and Extremadura (-0.5% both), Canarias and Castilla la Mancha (-0.6%), Melilla (-0.7%) and Ceuta (-1%). The annual rate of the CPI for constant taxes stood at -0.2% in May, the same as that of the general CPI.

The INE has also published the harmonized CPI (IPCA) for the month of May, whose annual rate stands at -0.3%, compared to -0.7% the previous month. If this rate is compared with that estimated by Eurostat for the euro area as a whole in April (0.3%), the inflation differential favorable to Spain decreases one tenth, to stand at 0.6 percentage points.

In summary, the annual variation rate of the CPI has increased four tenths in May, due to the evolution of the prices of all its components, especially the most volatile, unprocessed food and energy products. Core inflation has risen two tenths, to 0.5%, chaining five months of positive values. Therefore, the upward trend in prices and the favorable inflation differential with respect to the eurozone continues, with the consequent positive effect on the competitiveness of the Spanish economy, which in turn will continue to boost exports, production and employment. .

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