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

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

The annual variation rate of unprocessed food prices experienced a notable increase, from -1.5% in September to 1.7% in October. This evolution is due, to a large extent, to the departure of fresh fruits, whose prices have increased by 2.8% year-on-year following the 5.4% decrease registered in the previous month. This rebound is mainly due to a base effect derived from the sharp fall recorded in October 2013.

Energy prices in October had a negative interannual rate of -1.1%, after the stabilization of the previous month. The main components, fuels and fuels and the electricity tariff have contributed to this decrease. Fuels and fuels have increased the rate of interannual fall by four tenths, up to 3.3%, in line with the evolution of oil prices. The annual rate of the electricity rate has increased from 8.4% in September to 4.9% in October, as a result of a monthly fall 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 elements of the CPI, fresh food and energy) remained at -0.1% in October. This 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 food processed at -0.2 %.

Within the group of services, tourism and hospitality prices accelerated one tenth, to 0.6%, largely due to the organized travel component. On the contrary, interurban public transport has reduced its annual rate by more than two points, to 0.9%, and university education has moderated its rate 1.9 points, to 1.4%. BINES prices kept their year-on-year rate at -0.3%, with an acceleration of cars from almost one point, up to 2%, and more moderate 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 of milk and milk products, coffee, cocoa and infusions and mineral water, soft drinks and juices.

In inter-monthly terms, the CPI increased 0.5% in October, one tenth more than in the same month last year. This price increase is explained by the increase in 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 1.2%, mainly due to the rise in fresh fruits and fresh vegetables. Those from processed food increased 0.2% due to the increase in oil and fat prices.

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

The prices of services decreased 0.4% in October compared to the previous month, mainly due to tourism and hospitality (-0.8%). Within this heading, the fall in the price of organized trips (-3.9%) and hotels, cafes and restaurants (-0.4%), as well as inter-urban public transport (-2.5%) and services telephone (-1.5%).

Of the 17 autonomous communities, six have registered in October a year-on-year inflation rate above the national average: 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 have the same inflation as the national average (-0.1%) and the rest of the communities register rates below the national average: Andalusia, 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 to constant taxes has been -0.1% in October, as well as that of the general CPI, one tenth higher than the previous month. The INE has also published the harmonized CPI (IPCA) for October, whose annual rate is -0.2%, one tenth higher than the previous month. If this rate is compared with that estimated by Eurostat for the whole euro zone (0.4%), the inflation differential favorable to 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 is still favorable to Spain compared to the euro zone, 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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