• 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 by 0.6 points, indicating improvements in competitiveness

The Consumer Price Index (CPI) decreased 0.2% in May on a year-on-year basis, 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 exceeds four tenths in April. This price acceleration has been reflected in the main items of the CPI, especially in unprocessed food and energy products, the most volatile elements of the general index. In relation to a month before, prices rose 0.5%, especially for energy and fresh food.

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

Core inflation (which excludes the most volatile elements of the CPI, such as fresh food and energy) increased in May two tenths, to 0.5%. This increase responds to the bullish behavior of service inflation, 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 inter-urban public transport rubrics, whose rate stands at 1.4% after the 1.5% decline in the previous month; that of telephone services, which moderates, reduces the intensity of the fall by half, to 1.7%; and to tourism and hospitality, whose annual rate increases 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 car prices. Processed food, including beverages and tobacco, registered a rate of 0.9%, compared to 0.7% in the previous month, an increase that is mainly explained by the rebound in the price of fresh fruits, which increase 6% year-on-year, after the 1.2% decrease in April.

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

The annual CPI rate in May increased in all autonomous communities. Inflation rates above the national average were recorded in seven of them: Balearic Islands (0.2%), Catalonia (0.1%), Basque Country (0%), 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 at constant taxes was -0.2% in May, the same as that of the general CPI.

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

In summary, the annual variation rate of the CPI has increased in May four tenths, 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 euro area 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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