• The slight rise compared to November is explained by the rise in energy products and unprocessed food
  • The differential with the euro zone continues to be favorable to Spain at 0.5 points

The Consumer Price Index (CPI) registered a month-on-month increase of 0.1% in December, the same as the one a year earlier, and its year-on-year rate increased one tenth, to 0.3%, according to data published today by the National Statistics Institute (INE). This rate is the lowest at the end of a year since the historical series exists and has led to an intense reduction in inflation throughout 2013 (2.6 percentage points).

The rise of one tenth of the year-on-year CPI rate in December is due to energy products and unprocessed food, its most volatile components. Conversely, the rest of the major components of the CPI have moderated their year-on-year rates: processed food, two tenths; and services and Non-Energy Industrial Goods (BINES), one tenth.

Energy products have registered an annual rate of 0.2%, compared to -0.7% last November, ending five consecutive months of negative rates. Within this group, its main component, fuels and fuels, has increased its annual rate from 0.4% last November to 1.7%. This is the result of a month-on-month increase (0.9%) in December 2013, compared to the 0.4% decrease registered in the same month of 2012.

The annual rate of unprocessed food interrupts the moderation path of the previous three months, increasing two tenths to 0.6%. This slight acceleration is mainly due to the increase in the price of fresh vegetables, which have raised their annual rate by 8.6 points, to 2.8%. On the contrary, it is worth noting the moderation of fresh fruits, which reduced their annual rate by almost two percentage points, to 2.4%, and continue to correct the strong rebound that these products registered in the May-August period of last year.

Core inflation or stable core prices fell two tenths in December, to 0.2%, a moderation to which its three main components contributed. BINES reduced its annual rate by one tenth, from -0.4% in November to -0.5%, mainly due to the item of clothing and footwear, which cut its interannual rate by three tenths, until stabilizing (0.0 %). This evolution responds to a greater intensity (or more advance) of the sales in December 2013 compared to the same month of the previous year. Services place their annual rate at 0.0%, compared to the slight advance of 0.1% in the previous month. This moderation is due to the heading of tourism and hospitality, which registers an annual rate of 0.2%, three tenths lower than that of November. Urban and intercity public transport have also contributed to this moderation.

Processed food, including beverages and tobacco, reduces its annual rate by two tenths, to 2.3%. This slowdown is explained, fundamentally, by the items of oils and fats, which reduce their annual rate by almost 4 points, to 3.2%. To a lesser extent, the decrease in the annual rate has influenced other items, such as alcoholic beverages and tobacco.

The 0.1% month-on-month increase in the general index responds, especially, to unprocessed food, energy products and services. Unprocessed food rose 1.3%, which is due to fresh legumes and vegetables, which increased by 16.3%, and sheep meat, 1.5%. Energy products increase 0.7% monthly, as a result of the 0.9% increase in fuel and fuel prices. Finally, services show a monthly rate of 0.2%, mainly due to tourism and hospitality (0.8%) and interurban public transport (0.3%).

Of the 17 autonomous communities, 6 have registered a year-on-year inflation rate higher than the national average, the most inflationary being Cantabria and the Basque Country (0.6% each), followed by Galicia, Castilla y León and the Balearic Islands (with a 0.5%). Inflation in Andalusia has coincided with the National average and in Aragon, Asturias, Catalonia, Madrid, Castilla-La Mancha and Valencia inflation was 0.2%. In La Rioja it stood at 0.1%, and in Extremadura and Navarra inflation was nil. Ceuta, Canarias and Melilla registered negative inflation rates (-0.1% the first and -0.4% the other two).

In December, the annual rate of the CPI at constant taxes has remained at 0.2% in the previous month and the underlying rate at constant taxes has dropped one tenth, to stand at 0.2% as well. In the constant tax index, the annual rate of energy was -0.1% (-1% the previous month) and that of unprocessed food was 0.6% (0.4% in November). Within the core of inflation underlying constant taxes, BINES prices stood at -0.5% year-on-year (-0.4% in the previous month), those of processed foods rose 2.1% ( 2.3% the previous month) and those of services showed year-on-year stability, compared to the 0.1% increase in November.

The INE has published the harmonized CPI (IPCA) for December, whose annual rate stands at 0.3%, the same as in the previous month. If this data is compared with the annual rate estimated by Eurostat for the euro area as a whole (0.8%), the inflation differential continues to be favorable for Spain at 0.5 points, although one tenth less than in November.

In summary, in December inflation remained at moderate levels, at 0.3% in the annual rate. Inflation expectations remain low for the coming months, continuing at levels below those of our euro partners, with the consequent impact on competitiveness and exports. It will also favor the purchasing power of wages and pensions, with their expected effects on consumption. Therefore, it is a positive fact, which reflects the correction of a traditional imbalance in the Spanish economy, which will facilitate the recovery of economic activity and employment.

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