• Core inflation, which includes services, processed food and industrial goods, remains stable at 0.9%
  • The differential with the euro zone 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 on a year-on-year basis, 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 was reduced by 1.9%, compared to the 1.6% decrease in the same month of 2015.

The prices of energy products in January registered a year-on-year rate of -10.3%, a decrease that is almost three points higher than the previous month (-7.5%). This greater fall is due to electricity, which decreases by 13% compared to a year earlier, after the 0.8% increase in the previous month. The fuel and fuel item 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 interannual variation rate of unprocessed food prices increases eight tenths in January, to 3.3%. This acceleration responds, to a large extent, to fresh fruits.

Core inflation (excluding the most volatile elements of the CPI, fresh food and energy) remained at 0.9% in January, the same as the previous month. The 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 the 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 lowering of medicines and pharmaceutical products and, to a lesser extent, cars and clothing and footwear.

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

Energy products registered an inter-monthly fall of 6.2% in January, as a result of a 4.5% decrease in fuels and fuels and 10.6% in the electricity tariff. BINE prices decreased 4.8% compared to the previous month, mainly due to the seasonal decline in clothing and footwear (-15.3%). The prices of services stabilized in January because the seasonal decline in organized trips (-8.5%) was offset by the increase in interurban public transport (1.2%).

The annual CPI rate in January decreases in all autonomous communities, except in Cantabria and Navarra, where it remains stable. They recorded rates above the national average of the Basque Country (0.1%), Catalonia (0%), Baleares and Navarra (-0.1%) and Aragón, 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 CPI rate for constant taxes was -0.3% in January, as was the general CPI.

The INE has also published the harmonized CPI (CPI) corresponding to the month of January, whose annual rate is -0.4%, compared to -0.1% in the previous month. If this rate is compared with that estimated by Eurostat for the whole of the euro zone in January (0.4%), the inflation differential favorable to Spain is extended by 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 result of the practical price stabilization in its three major components. The inflation differential is still favorable to Spain compared to the euro zone, favoring competitiveness gains and boosting our exports.

The INE has updated in January the weights of the different items that make up the shopping basket of the CPI, as is usual every year in that month. The modifications have been of small entity, being BINE and services the groups that have increased their weight in the shopping cart: 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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