• Core inflation rises one tenth to 1.1%
  • Spain's differential against the Eurozone improves one tenth

The Consumer Price Index (CPI) decreased by 0.8% in the interannual rate in March, the same as in February, 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 stability of the year-on-year rate is due to higher inflation in unprocessed food and services, which has offset the sharper drop in energy prices. In the month-on-month rate, the general CPI increased 0.6% in March, as in the same month of 2015.

The prices of energy products registered an interannual rate of -14.8% in March, seven tenths lower than that of February. This greater decrease was due to the heading of fuels and fuels, which accentuated the drop one point, to -15.2%, due to the evolution of the prices of fuels and lubricants (-14.4%, compared to – 13.3% in February). For its part, the annual rate of electricity prices has remained at -14.2%. Food inflation stood at 1.5% in March, three tenths above that of February, an increase that is explained entirely by unprocessed food, whose rate has gone from 0.8% in February to 2.2% in March. This acceleration responds, to a large extent, to the evolution of the prices of fresh vegetables and fresh fruits. For their part, processed food prices registered a rate of 1.3% in March, the same as that of February, highlighting within this group the strong increase in oil and fat prices (18.5%) and potatoes and their preparations (14.5%).

Core inflation (excluding the most volatile CPI elements, fresh food and energy) increased one tenth in March, to 1.1%, due to the slight acceleration in services prices, the rate of which increased one tenth, until the 1.4% year-on-year. This acceleration of services was the result of a divergent behavior of the items that comprise it. The rates of change in prices for university education (0%) and urban public transport (-0.6%) remained stable, while those for interurban public transport and tourism and hospitality increased 1.8 and 0.1 points, respectively, to stand at 0.4% and 1.6%. These increases have a high seasonal component derived from the celebration of Easter this year in March. The other two components of core inflation, processed food and Non-Energy Industrial Goods (BINE), kept their rates unchanged compared to February, at 1.3% and 0.5%, respectively.

In month-on-month terms, the CPI increased 0.6% in March, as in the same month of 2015. This increase is explained by the rise in the prices of energy products and BINE, with rates of 1.8 % and 1.1%, respectively. The price of the clothing and footwear component stands out in this second group, 4.3% month-on-month, as in the same month of 2015, as a consequence of the start of the new spring-summer season. To a lesser extent, the prices of services, with a rate of 0.4%, also contributed to the month-on-month increase in the general CPI, due in part to the rise in tourism and hospitality (1.1%) and interurban public transport ( 2.2%), the latter affected by the rise in air transport prices (5%). Finally, food prices have not changed compared to February, as the increase in processed food (0.1%) offset the fall in unprocessed food (-0.2%). The decrease in the prices of fresh fish and fresh fruits stands out in this second group, and the rise in the prices of fresh vegetables.

The interannual rate of the CPI remained negative in March in all the autonomous communities. Eight of them registered rates below the national average, with the lowest rates corresponding to Castilla-La Mancha (-1.4%) and Galicia, the Valencian Community, Cantabria and Castilla y León, all with a rate of -1.1% . Among the communities with CPI variation rates above the national average, the Basque Country (-0.4%) and Catalonia (-0.6%) registered the highest rates. The annual rate of the CPI for constant taxes stood at -0.8% in March, as did the general CPI.

The INE has published the harmonized CPI (IPCA) for the month of March, whose annual rate stands at -1%, the same as 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 widens one tenth, standing at -0.9 percentage points.

In summary, the interannual rate of the CPI has remained in March at the level of February due to higher inflation in unprocessed food and services, which has offset the intensification in the fall in the prices of energy products. Core inflation has increased one tenth, to 1.1%, reflecting the dynamism of private consumption. The inflation differential favorable to Spain vis-à-vis the euro area improves one tenth, with the consequent favorable effects on competitiveness and on our exports.



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