• The price differential with the euro zone stands at 0.7 tenths favorable to Spain, after improving half a point
  • Core inflation moderates to 0.7% for non-energy industrial goods and services

The Consumer Price Index (CPI) decreased 0.4% in August on a year-on-year basis, according to figures published by the National Statistics Institute (INE). This rate is five tenths lower than last July and coincides with that advanced by the INE at the end of last August. The decline in inflation is explained by the fall in energy prices and, to a lesser extent, by the moderation in the prices of services and non-energy industrial goods (BINE), which was partially offset by the upward trend in food, especially unprocessed.

The prices of energy products registered an interannual rate of -9.8% in August, four points lower than the previous month. All the components of the energy index contributed to this decrease. Fuels and fuels reduced their annual rate by 3.4 points, to stand at -14.1%, due to both the fall in the price of fuels and gas. Electricity recorded a decrease of 3.3% in the month, compared to a 2.3% increase from a year earlier, resulting in a reduction of its six-year interannual rate, up to 2.6% .

The annual variation rate of unprocessed food prices has increased significantly, a percentage point in August, to 2.7%, mainly due to the increase in the price of fresh vegetables and fish.

Core inflation (which excludes the most volatile elements of the CPI, such as fresh food and energy), decreased by one tenth in August, to 0.7%. This moderation is explained by the BINE, which reduced their annual rate by one tenth, to 0.3%, and by the prices of services, with an annual growth of 0.8%, one tenth below that of the previous month . This moderation was partially offset by the upward evolution of processed food. The deceleration of services rests on the tourism and hospitality rubric, whose annual rate was reduced by two tenths, up to 1.2%, and by the moderation of the prices of interurban transport, which reduce its annual rate from -0, July 8% to August -1.8%.

The annual rate of processed food, beverages and tobacco increases by two tenths, up to 1.4%, mainly due to the evolution of the oil. Regarding a year earlier, this product is 30.3% more expensive, 4.4 points more than in the previous month. Milk and tobacco, on the other hand, have evolved downwards, which partially compensates for the rise in oil.

In inter-monthly terms, the CPI fell 0.3% in August, compared to the 0.2% increase in the same month of 2014. This decrease is explained by the reduction of 4.3% of energy products, which responded both to a 3.3% fall in the prices of electricity and of fuels and fuels that decreased 4.7%, in line with the evolution of oil prices. BINE also contributed (-0.3%), especially clothing and footwear (-1.3%) due to summer sales.

The annual inflation rate decreased in August in all the autonomous communities. In five it was higher than the national one: Balearic Islands (0.2%), Catalonia (-0.1%), Basque Country (-0.2%), Valencian Community (-0.3%), La Rioja (-0 ,3%). The inflation of Andalusia coincided with the national. In the rest of the autonomous regions, inflation fell below the national rate, with the largest falls in Extremadura and Castilla-La Mancha, -0.9%, and Castilla y León and Cantabria, with -0.8%. On the other hand, the annual rate of the CPI for constant taxes stood at -0.4% in August, the same as that of the general CPI.

The INE has also published the harmonized CPI (CPI) for the month of August, whose annual rate is -0.5%, five tenths below that of the previous month. If this rate is compared with that estimated by Eurostat for the whole of the euro zone in August (0.2%, equal to July), the inflation differential favorable to Spain is extended by half a point, to -0.7 points percentage.

In summary, the annual variation rate of the CPI has been reduced by half a point in August, after six months of consecutive increases. The decline was mainly due to energy prices and, to a much lesser extent, to BINE and services. The underlying rate has moderated a tenth, to 0.7%. The inflation differential favorable to Spain against the Eurozone is significantly expanded, which allows for competitive gains in the economy, with the consequent favorable effect on exports, production and employment.



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