• Core inflation rises two tenths, to 0.8%, due to the acceleration of non-energy industrial goods and services
  • Spain continues to gain competitiveness due to the inflation differential with the eurozone

The Consumer Price Index (CPI) increased 0.1% in July in the annual rate, according to figures published today by the National Institute of Statistics (INE). This rate is one tenth higher than the one advanced by the INE at the end of last month and coincides with that registered in June. The stabilization of inflation is explained by the upward trend in the prices of non-energy industrial goods (BINE) and services, offset by the moderation in unprocessed food and energy products.

The prices of energy products registered an interannual rate of -5.8% in July, 0.1 percentage points lower than the previous month. This evolution is due to two opposing effects: On the one hand the upward evolution of the prices of electric energy and on the other, the greater decrease of fuels and fuels. Electricity recorded a monthly increase of 2.9%, compared to a 1.9% decrease a year earlier, which leads to an increase in the interannual rate of 5.1 points, to 8.6%. The annual rate of fuels and fuels drops 1.6 points, to -10.7%, due to the fall in prices of both fuels and gas.

The annual variation rate of unprocessed food prices has also been significantly reduced, 1.5 percentage points in July, to 1.7%, mainly due to fresh fruits and fresh vegetables.

Core inflation (which excludes the most volatile elements of the CPI, such as fresh food and energy) increased by two tenths in July, to 0.8%. This increase is explained by the rise of the BINE, which increase their annual rate by one tenth, up to 0.4%, and service prices, with an annual growth of 0.9%, two tenths above the previous month . The acceleration of services rests on the rubric of tourism and hospitality, whose annual rate rose two tenths, to 1.4%.

The annual rate of processed food, beverages and tobacco remains at 1.2% the previous month, because the four-point increase in the interannual rate of oils has been offset by the slowdown in tobacco and other items such as coffee , cocoa and infusions.

In inter-monthly terms, the CPI decreased 0.9% in July, as in the same month of 2014. This decrease is explained by the lowering of unprocessed foods, especially fresh fruits (-2.4%), legumes and fresh vegetables (-5.6%) and potatoes and their preparations (-1.5%). Energy products also contributed, with a decrease of 0.6%, due to the fall in the prices of fuels and fuels (-1.9%), and BINE (-3.9%), especially for clothing and footwear (-12.9%) due to summer sales.

The annual inflation rate increased in July in seven autonomous communities. In five it was higher than the national one: Balearic Islands (0.6%), Catalonia (0.4%), Valencian Community (0.3%), Basque Country and La Rioja (0.2%). 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, Castilla-La Mancha, the Canary Islands and Aragon (-0.3%). On the other hand, the annual rate of the CPI at constant taxes stood at 0.1% in July, the same as that of the general CPI.

The INE has also published the harmonized CPI (CPI) for the month of July, whose annual rate is 0.0%, the same as the previous month. If this rate is compared with that estimated by Eurostat for the whole of the euro zone in July (0.2%, equal to June), the inflation differential favorable to Spain remains at -0.2 percentage points.

In summary, the annual variation rate of the CPI has remained at 0.1% in July, after five months of consecutive increases. The stability of inflation has been due to the fact that the acceleration of the more regular components of the CPI (BINE and services) has fully compensated for the moderation of the most volatile, unprocessed food and energy products. The underlying rate has risen two tenths, to 0.8%, reflecting the dynamism of private consumption. Inflation in Spain remains lower than that of the Eurozone, which allows for competitive gains in the economy, with the consequent favorable effect on exports, production and employment.

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