• The inflation differential favorable to Spain with respect to the euro area stands at 0.5 percentage points
  • Core inflation increased two tenths in the last year, down to 0.9%

The Consumer Price Index (CPI) decreased in August by 0.1% in the interannual rate, a fall five tenths lower than in July, according to figures published by the National Statistics Institute (INE). This rate coincides with that advanced by the INE at the end of last month. The moderation in the fall in the CPI is mainly due to the lower decrease in the prices of energy products, although the acceleration in the prices of services and non-energy industrial goods (BINE) would also have contributed. In month-on-month rate, the general CPI increased 0.1% in August, compared to the decrease of 0.3% registered in the same month of 2015, largely due to seasonal factors related to hospitality.

The prices of energy products experienced a year-on-year drop of 9.1% in August, almost three points lower than in July (-12%). The lower decline is explained by the moderation both in the rate of decrease in electricity prices (-11.3%, compared to -14.9% in July) and in that of fuels and fuels (-8.3 %, compared to -11.1% in the previous month).

Food inflation stood at 1.6% in August, seven tenths lower than the previous month, mainly due to the slowdown in the prices of unprocessed food, the rate of which decreased by two percentage points, to 3.7%. This evolution responds, to a large extent, to the lower increases in the prices of fresh fruits (10.3%, a rate 4.1 points lower than that of the previous month) and of fresh vegetables (2.3% , compared to 9.3% registered in July). The rate of increase in processed food prices also decreased in August, although to a lesser extent, one tenth to 0.7%.

Core inflation (excluding the most volatile elements of the CPI, fresh food and energy) increased two tenths in August, to 0.9%, as a consequence of the acceleration in BINE prices (three tenths, down to 0, 7%) and services (two tenths, up to 1.1%). Within BINE, car prices stand out, which have risen 4.6%, almost two points more than the previous month and, within services, the increase in prices for organized trips (4.4% year-on-year) , after the slight increase (0.6%) of the previous month, and of telephone services (3%, nine tenths more than the month of July).

In month-on-month terms, the CPI grew 0.1% in August, compared to the 0.3% drop in the same month of 2015. This evolution is due to the lower drop in the prices of energy products (-1%, compared to -4.3% from a year earlier). Services have also contributed to the month-on-month rise, registering a rate of 0.6%, two tenths higher than that of August last year. BINE and food prices remained stable, compared to the rates of -0.3% and 0.6% registered, respectively, in August last year.

Within the food group, the prices of unprocessed food decreased 0.3% month-on-month in August, after the 1.7% increase in the same month of 2015, while those of processed food products increased slightly (0.1 %), as in August 2015. Among the unprocessed foods, the fall in the prices of fresh fruits stands out (-0.8%, compared to the growth of 2.8% a year earlier) and of fresh legumes and vegetables (-2.1%, after the 4.6% rise in August last year).

The interannual rate of the CPI has increased in August in all the autonomous communities, reaching positive levels in four of them: Navarra (0.3%), Asturias (0.1%), Catalonia (0.1%) and the Basque Country (0.1%). In addition to these, it registered a rate higher than the Murcia national average, as prices remained stable. Extremadura and Andalusia registered a rate equal to the national average (-0.1%), and among those with lower than average rates, the lowest corresponded to La Rioja and Castilla y León (-0.4% in both). The annual rate of the CPI at constant taxes stood at -0.1% in August, as did the general CPI.

The INE has also published the harmonized CPI (HICP) for the month of August, whose annual rate stands at -0.3%, four tenths higher than that of July. If this rate is compared with that advanced by Eurostat for the euro area as a whole (0.2%, as in July), the inflation differential favorable to Spain decreases four tenths, to stand at 0.5 points percentage.

In summary, the CPI in August moderated the year-on-year fall rate for the fourth consecutive month until practically stabilizing, mainly due to the lower drop in energy prices and, to a lesser extent, to the acceleration in the prices of services and BINE. Core inflation has increased two tenths, down to 0.9%, and the inflation differential against the euro area remains favorable to the Spanish economy, standing at half a percentage point, with the consequent favorable effects on competitiveness and on the exports.

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