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

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

The rise of one tenth of the CPI year-on-year rate in December responds to energy products and unprocessed foods, their most volatile components. On the contrary, the rest of the major components of the CPI have moderated their interannual 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 an inter-monthly increase (0.9%) in December 2013, compared to the 0.4% decrease recorded in the same month of 2012.

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

Core inflation or stable price core decreases two tenths in December, to 0.2%, a moderation to which its three major components have contributed. BINES reduce their annual rate by one tenth, from -0.4% in November to -0.5%, mainly due to the item of clothing and footwear, which cuts its interannual rate three tenths, to stabilize (0.0 %). This evolution responds to a greater intensity (or greater 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 increase of 0.1% in the previous month. This moderation is due to the rubric of tourism and hospitality, which registers an annual rate of 0.2%, lower by three tenths to that of November. Urban and interurban public transport have also contributed to this moderation.

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

The inter-monthly increase in December of 0.1% of the general index responds, in particular, to unprocessed foods, energy products and services. Unprocessed foods increase 1.3%, which is due to fresh vegetables, which increase 16.3%, and sheep meat 1.5%. Energy products increase 0.7% monthly, as a result of the 0.9% increase in fuels and fuels. Finally, the 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 Baleares (with a 0.5%) In Andalusia, inflation 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 has been 0.1%, and in Extremadura and Navarra inflation has been zero. Ceuta, Canarias and Melilla have 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% the previous month and the underlying rate at constant taxes has fallen by one tenth, to also stand at 0.2%. In the constant tax index, the annual energy rate was -0.1% (-1% the previous month) and that of unprocessed foods 0.6% (0.4% in November). Within the core of the inflation underlying constant taxes, the prices of BINES 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 the services showed year-on-year stability, compared to the 0.1% increase in November.

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

In summary, in December inflation remained at moderate levels, 0.3% at 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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