• Industrial goods and services, especially tourism and hospitality, raise tenth core inflation
  • The differential with the euro zone expands one tenth, to 0.9 points favorable to Spain, which improves competitiveness

The Consumer Price Index (CPI) decreased by 1% in December on a year-on-year basis, according to figures published by the National Statistics Institute (INE). This fall is less than one tenth to that advanced at the end of that month. The reduction is, therefore, six tenths compared to November, an evolution that is explained by the most volatile components of the CPI, especially energy products. In relation to the previous month, the general CPI decreased 0.6% in December, compared to the 0.1% increase recorded in the same month of 2013. Following this result, the average annual CPI rate of 2014 stands at -0.15%, compared to the 1.4% increase in 2013.

The prices of energy products registered an interannual rate of -8.5% in December, a decrease that was more than five points higher than the previous month (-3.2%). This greater fall is due, exclusively, to the departure of fuels and fuels, which intensifies the rate of interannual fall by 7.3 points, up to 11.8%, in line with the sharp decline in oil prices. On the contrary, the annual rate of the electricity rate increases half a point, up to 0.8%, after a monthly increase of 0.5%.

The interannual variation rate of unprocessed food prices has fallen 1.6 points in December, to -0.4%. This moderation responds to the intense fall of fresh vegetables and vegetables (derived from a base effect) and to other items such as crustaceans and molluscs, as well as some meats, including beef and pork.

Core inflation (excluding the most volatile elements of the CPI, fresh food and energy) increased in December one tenth, until it was canceled. This acceleration is explained by the BINES (non-energy industrial goods) and services, which increased their annual rate by one tenth, to -0.2% and 0.3%, respectively. The processed food remained at -0.2%.

Within the group of services, the moderate increase in inflation responded to the rubric of tourism and hospitality, whose annual rate goes from 0.8% in November to 1% in December. This acceleration is explained, in turn, by the upward trend in organized travel, which increases 4.2%, 1.2 points more than in the previous month, and interurban public transport, which doubles its rate annual, up to 1.4%.

BINES prices increased their annual rate by one tenth in December, to -0.2%, after remaining at -0.3% for three consecutive months. This slight acceleration responds to the cost of cars and, to a lesser extent, to medicines and therapeutic material. Processed food, including beverages and tobacco, has an annual rate of -0.2% in December, as in the previous four months, stability explained by the acceleration in items such as oil, mineral water and soft drinks and juices , which compensates for moderation in milk and milk products and sugar. The annual rates of the rest of the items in this group show a certain tone of stability.

In inter-monthly terms, the CPI decreased 0.6% in December, compared to the 0.1% increase in the same month of 2013. This decrease is explained by the lowering of energy products, processed and unprocessed food and BINES, especially clothing and footwear, partially offset by the higher prices of services, especially tourism and hospitality and interurban public transport. The prices of unprocessed food were reduced by 0.3% compared to the month of November, due to declines in fresh fruits and pig meat. The prices of processed food decreased slightly, 0.1%, due to the lowering of sugar and alcoholic beverages, offset by the rising cost of oils and fats.

Energy products registered a month-on-month fall of 4.8% in December, as a result of a 6.8% decrease in fuels and fuels, partially offset by the 0.5% rise in the electricity tariff. BINES prices decreased 0.5% compared to the previous month, as a result of the seasonal fall in clothing and footwear (-2%). On the other hand, the price of cars increased by 0.3% month-on-month.

The prices of services increased by 0.3% in December compared to the previous month, an increase that is mainly explained by the tourism and hospitality item (1%) and by interurban public transport (1%). Within the tourism and hospitality industry, the turnaround in organized travel prices stands out (9%).

Of the 17 autonomous communities, four recorded higher inflation rates in December than the national average: Catalonia and the Basque Country (-0.7% both), Balearic Islands (-0.8%) and La Rioja (-0.9% ). Galicia had the same rate as the national average (-1%) and the rest of the communities below average rates. The lowest corresponded to Castilla-La Mancha, with -1.5%. The annual rate of the CPI at constant taxes stood at -1% in December, as was the general CPI, six tenths lower than the previous month.

The INE has also published the harmonized CPI (CPI) corresponding to the month of December, whose annual rate stands at -1.1%, compared to -0.5% in the previous month. If this rate is compared with that estimated by Eurostat for the whole of the euro zone in December (-0.2%), the inflation differential favorable to Spain is extended by one tenth and stands at -0.9 percentage points.

In summary, the annual variation rate of the CPI has decreased in December due to the evolution of prices of energy products and unprocessed foods, while core inflation has increased one tenth to zero. Therefore, improvements in the purchasing power of income are maintained in a context of wage moderation, which together with the reduction of taxes and the creation of employment will give greater impetus to consumption and the growth of the economy. 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.



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