• Moderation in the service sector and increases in processed food leave core inflation at 0.2%
  • The differential with the euro zone remains at 0.9 points, which favors competitiveness

The Consumer Price Index (CPI) decreased by 1.1% in the interannual rate in February, according to figures published by the National Statistics Institute (INE). This fall coincides with that anticipated by the INE at the end of that month and represents an increase of two tenths with respect to inflation in January. This increase is explained by the more volatile components of the CPI, unprocessed food and energy products. In relation to the previous month, the general CPI increased 0.2%, compared to the non-variation in the same month of 2014.

The prices of energy products registered an interannual rate of -10.2% in February, 1.2 points above that of the previous month (-11.4%). This smaller fall is exclusively due to the heading of fuels and fuels, which moderate the interannual decrease rate 3.6 points, up to 12.9%, in line with the upward evolution of oil prices during February. Conversely, electricity prices evolved as the electricity rate for domestic uses was reduced by 5.2% in the month and its annual rate by almost six points, down to -3%.

The year-on-year rate of change in unprocessed food prices increased 1.6 points in February to 0.9%. This strong acceleration has responded, to a large extent, to fresh fruits and fresh vegetables.

Core inflation (excluding the most volatile CPI elements, fresh food and energy) remained at 0.2% in February. This stability responds to the fact that the moderation in the inflation of services was compensated by the acceleration of processed food and the stability of the interannual rate of BINES (non-energy industrial goods). Services moderated their annual rate by two tenths, down to 0.3%, BINES kept it at -0.1% and processed food increased said annual rate by two tenths, down to 0.1%.

Within the group of services, the slowdown in inflation responded to the heading of tourism and hospitality and to that of interurban public transport. The annual rate of the first heading goes from 1.1% in January to 0.9% in February, due to the slowdown in organized travel prices, which reduce its annual rate by 2.5 percentage points, down to 2, 9%. Interurban public transport moderates its annual rate from 4.1% in January to 1.3% in February, due to the slowdown of more than 6 points in air transport prices.

BIN prices in February maintained their annual rate at -0.1%. This stability mainly responds to the fact that the fall in clothing and footwear prices in the current year, due to the winter sales, has been the same as the one a year earlier. Processed food, including beverages and tobacco, registered an annual rate of 0.1%, compared to -0.1% the previous month. This increase is explained by the acceleration of items such as oil and tobacco that offset the moderation of others such as milk.

In month-on-month terms, the CPI increased 0.2% in February, compared to the non-variation in the same month of 2014. This slight advance is explained by the increase in the cost of energy products, especially fuels and fuels, of services, particularly tourism and hospitality and food prices. The prices of unprocessed food increased by 0.8% compared to the month of January, mainly due to the rise in fresh vegetables (10.5%) and, to a lesser extent, to poultry meat. Fish, fresh fruit and sheep meat fell. The prices of processed food increased by 0.1%, due to the rise in oil and tobacco, partially offset by the lower cost of sugar and milk.

Energy products registered a 1.4% month-on-month increase in February, as a result of a 4.1% increase in fuels and fuels, partially offset by the 5.2% drop in the electricity rate. BINES prices decreased by 0.4% compared to the previous month, as a consequence of the seasonal fall in clothing and footwear (1.7%).

The prices of services increased 0.1% in February with respect to the previous month, an advance that is mainly explained by the heading of tourism and hospitality (0.4%). This rise was partially offset by a 2% decrease in intercity public transport, as a result of a 4.2% drop in air transport prices.

The annual CPI rate in February increased in all the Autonomous Communities except the Canary Islands, which decreased one tenth. Inflation rates above the national average were registered in six autonomous communities: Catalonia and the Basque Country (-0.8%, in both), the Balearic Islands, La Rioja and Madrid (-0.9%, in all three) and the Community Valencian (-1%). Andalusia had the same rate as the national average (-1.1%) and the rest of the communities had lower rates than the average. The lowest corresponded to Castilla-La Mancha and Castilla-León with -1.6%, in both. The annual rate of the CPI for constant taxes stood at -1.1% in February, as did the general CPI, two tenths higher than the previous month.

The INE has also published the harmonized CPI (HICP) for the month of February, whose annual rate stands at -1.2%, compared to -1.5% the previous month. If this rate is compared with that estimated by Eurostat for the euro area as a whole in February (-0.3%), the inflation differential favorable to Spain remains at -0.9 percentage points in the previous month.

In summary, the annual variation rate of the CPI has increased in February by two tenths, due to the evolution of the prices of energy and food products, especially the unprocessed one. Core inflation has remained at 0.2%, following increases in the previous two months. Therefore, moderation in the evolution of prices is maintained, which favorably affects the competitiveness of the Spanish economy and allows gains in purchasing power of wages and pensions. These improvements provide a boost to consumption and investment with the consequent impact on job creation, the main objective of economic policy.

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