• The rise in fresh food prices contrasts with the decline in energy products
  • Core inflation remains stable and the differential with the euro zone remains favorable to Spain at six tenths

The Consumer Price Index (CPI) decreased 0.1% in October in the interannual rate, in line with that advanced in late October, according to figures published by the National Statistics Institute (INE). This rate is one tenth higher than that of September, an evolution that is explained by the increase in the prices of unprocessed food. In relation to the previous month, the general CPI increased 0.5%, one tenth more than in October 2013.

The year-on-year rate of change in the prices of unprocessed food experienced a notable increase, from -1.5% in September to 1.7% in October. This evolution is largely due to the fresh fruit item, whose prices have grown by 2.8% year-on-year after the decrease of 5.4% registered in the previous month. This upturn is mainly due to a base effect derived from the sharp drop registered in October 2013.

The prices of energy products had a negative year-on-year rate of -1.1% in October, after stabilizing the previous month. Its main components, fuels and fuels and the electricity tariff have contributed to this decrease. Fuels and fuels have increased by four tenths the year-on-year rate of decline, to 3.3%, in line with the evolution of oil prices. The annual rate of the electricity tariff has gone from growing from 8.4% in September to 4.9% in October, as a result of a monthly decrease of 0.7% in October of the current year compared to an increase of 2.7% in the same month of 2013.

Core inflation (excluding the most volatile CPI elements, fresh food and energy) remained at -0.1% in October. Said stability is explained by the behavior of its three major components, which have maintained their respective annual rates: services at 0.1%, BINES (non-energy industrial goods) at -0.3% and processed food at -0.2 %.

Within the services group, tourism and hospitality prices accelerated one tenth, to 0.6%, largely due to the organized travel component. In contrast, interurban public transport has reduced its annual rate by more than two points, to 0.9%, and university education has moderated its rate by 1.9 points, to 1.4%. BINES prices kept their year-on-year rate at -0.3%, with an acceleration in automobiles of almost one point, to 2%, and more moderate in clothing and footwear, two tenths to 0.3%. Processed food, including beverages and tobacco, maintained its annual rate at -0.2%, stability that is explained by the increase in items such as oils, which have offset the moderation in milk and milk products, coffee, cocoa and herbal teas and mineral water, soft drinks and juices.

In month-on-month terms, the CPI increased 0.5% in October, one tenth more than in the same month last year. This increase in prices is explained by the increase in the cost of BINES and food, both processed and unprocessed, partially offset by the decrease in the prices of services and energy products. The prices of unprocessed food increased by 1.2%, mainly due to the increases in fresh fruit and fresh vegetables. Those of processed food increased by 0.2% due to the increase in prices of oils and fats.

Energy products have registered a monthly drop of 1.9% as a result of a drop in fuels and fuels (-2.3%) and in the electricity rate (-0.7%). BINES prices increased by 3%, as a consequence of the seasonal increase in clothing and footwear (11%) and the slight increase in the price of automobiles (0.3%).

The prices of services decreased by 0.4% in October with respect to the previous month, mainly due to the heading of tourism and hospitality (-0.8%). Within this heading, the drop in the price of organized trips (-3.9%) and of hotels, cafes and restaurants (-0.4%), as well as interurban public transport (-2.5%) and services stands out. telephone (-1.5%).

Of the 17 autonomous communities, six registered an interannual inflation rate above the national average in October: the Balearic Islands, La Rioja and the Basque Country (0.2%), Catalonia (0.1%), Galicia and the Community of Madrid (0%). Castilla y León and Navarra present the same inflation as the national average (-0.1%) and the rest of the communities register lower rates than the national average: Andalucía, Asturias and the Valencian Community (-0.2%), Aragón, Cantabria, Castilla-La Mancha, Extremadura and the Murcia region (-0.3%). The least inflationary in October was the Canary Islands (-0.6%).

The annual rate of the CPI for constant taxes stood at -0.1% in October, as did the general CPI, one tenth higher than the previous month. The INE has also published the harmonized CPI (IPCA) for October, whose annual rate stands at -0.2%, one tenth higher than the previous month. If this rate is compared with that estimated by Eurostat for the euro area as a whole (0.4%), the inflation differential in favor of Spain remains at 0.6 percentage points.

In summary, inflation has increased in October due to the evolution of prices of unprocessed food, while core inflation has remained at -0.1%. The inflation differential continues to be favorable to Spain compared to the euro area, which is making it possible to obtain competitiveness gains and boost our exports, with the consequent positive impact on the recovery of economic activity and employment.

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