• Core inflation, which excludes the most volatile elements of the index, remains at 0.7%
  • The differential favorable to Spain with respect to the euro area stands at one percentage point

The Consumer Price Index (CPI) decreased by 1% year-on-year in May, a decrease of one tenth that of April, according to figures published by the National Statistics Institute (INE). This data coincides with that advanced by the INE at the end of last month. The lower year-on-year decrease in the CPI is due to the moderation in the rate of decline in energy prices and, in particular, in fuels and fuels and electricity. Within the service sector, tourism and hospitality have also contributed to higher inflation. In the month-on-month rate, the general CPI increased 0.5% in May, the same as in the same month last year.

The prices of energy products registered a year-on-year rate of -14% in May, 1.1 percentage points higher than that of April. The slower rate of decline was due both to electricity (which moderated the intensity of the fall by almost two points, down to -16.4%) and to fuels and fuels (which moderated it by seven tenths, down to -13.5% ). At the same time, the behavior of this last heading is a consequence of the smaller decrease of its two components: gas, which has gone from registering a rate of -13.2% in April to -12.6% in May, and fuels and lubricants, which have reduced the rate of fall by almost one point, to -12.6%.

Food inflation stood at 1.6% in May, two tenths lower than the previous month, mainly due to the evolution of prices of unprocessed food, the rate of which has dropped six tenths, to stand at 2.6%. This slowdown largely responds to the prices of fresh fruits. For its part, processed food registered a rate of 1.1% in May, one tenth lower than that of April.

Core inflation (excluding the most volatile CPI elements, fresh food and energy) remained at 0.7% in May, as the rate of advance in processed food prices remained practically stable (1.1%, one tenth less than the previous month), of non-energy industrial goods (BINE, 0.4%, one tenth less than in April) and of services (0.8%, rate equal to that of April). However, within services, it is worth noting the disparate behavior of its components. The rate of change in tourism and hospitality prices increased five tenths, to 0.4%, while that of communications fell six tenths, to 1.8%, due to the prices of telephone services.

In month-on-month terms, the CPI increased 0.5% in May, the same as in the same month of 2015. This stability occurred despite the fact that the prices of energy products grew 2.3% month-on-month, 1.3 percentage points more than in the same month last year. In contrast, the other main components of the general CPI registered month-on-month rates lower or equal to those of a year earlier. BINE prices recorded a month-on-month rate of 0.8%, one tenth lower than that of May 2015, and food prices increased 0.3% (0.5% a year earlier), due to the unprocessed food (0.8%, compared to 1.4% a year earlier), while processed food prices remained stable (0%, as in May last year). Among the unprocessed foods, the moderation in the rise in prices of fresh fruits stands out (7.8% in May 2016 compared to 9% a year earlier).

On the other hand, the prices of services grew 0.1%, as in May 2015, as a result of uneven behavior among its components, highlighting the stability of communications prices in May this year, compared to the 1.6% rise in May of last year, and the maintenance of tourism and hospitality prices (0.1%), after the decrease of 0.4% in the same month of the previous year.

The annual rate of the CPI has increased in May in the majority of autonomous communities. Seven of them registered lower rates than the national average, the lowest corresponding to Castilla-La Mancha (-1.4%), Cantabria (-1.3%), Castilla y León (-1.3%) and Comunidad Valenciana ( -1.2%). Andalucía, Comunidad de Madrid and Murcia registered the same rate as the national CPI (-1%). Among the communities with rates above the national average, the Basque Country and Catalonia registered the highest rates (-0.7% both). The annual rate of the CPI for constant taxes stood at -1% in May, as did the general CPI.

The INE has also published the harmonized CPI (IPCA) corresponding to the month of May, whose annual rate stands at -1.1%, one tenth higher than the previous month. If this rate is compared with that advanced by Eurostat for the euro area as a whole in that month (-0.1%), the inflation differential favorable to Spain remains at one percentage point.

In summary, the interannual rate of the CPI has increased in May one tenth with respect to that of April, due to the moderation in the fall of the price of energy products. The inflation differential favorable to Spain vis-à-vis the euro area remains at one percentage point for the third consecutive month, with the consequent favorable effects on competitiveness and exports.

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