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In August, the interannual rate of the Consumer Price Index (CPI) increased one tenth, to -0.5%, accumulating five months in negative. Inflation thus moderated its rate of decline, due to the lesser decline in energy products.

For its part, core inflation continued the deceleration path that began in July and fell two tenths, to 0.4%, after a long period of stability at around 1%. Analyzing its components, it is observed that they are registering a clear deceleration. Thus, the prices of Services fell two tenths, to 0.2%, after the notable decrease recorded in July. The prices of industrial goods without energy products decreased their variation rate by one tenth, to 0.3%, and processed foods, beverages and tobacco decreased their interannual variation by two tenths, to 1.2%.

The prices of unprocessed foods, however, increased their rate of change by four tenths and stood at 3.5%. They continue to be the most inflationary component of the basket, with the most intense increases being concentrated in the headings of fresh fruits, sheep meat and other meats.

The INE has developed two indicators to know the evolution of the prices of the group of products most consumed by society during confinement (Covid-19 goods and Covid-19 services), since the declaration of the state of alarm had an impact on the household consumption patterns. Covid-19 goods are food, beverage, tobacco, cleaning and non-durable household products, pharmaceuticals, pet food, and personal care items. Covid-19 services include housing and garage rental services, water distribution, sewerage, garbage collection, community expenses, electricity, gas, heating oil, telephone services, music and streaming television, insurance, commissions. banking and funeral services.

The interannual rate of the prices of Covid-19 goods stands at 1.7%, compared to 1.8% in July, mainly due to the lower increase in the prices of some foods, among others, milk, cheese and eggs.

The interannual rate of the prices of Covid-19 services stands at -2.1%, compared to -2.9% in July, an evolution that has been fundamentally determined by the increase in electricity prices in August .

Energy prices in August continued to moderate their rate of decline. Specifically, the interannual rate this month of the prices of energy products was -9.3%, almost one and a half points more than the previous month (-10.7%).

Brent crude stood at 45.4 dollars / barrel in August, 3.3% more than in July, favored by the weakness of the dollar and the strength of the Chinese economy. In year-on-year terms, the price is 23.1% lower than a year ago. For the coming months, doubts about the strength of the recovery of the world economy and the uncertainty about the evolution of the Covid-19 pandemic cause futures prices to oscillate around 45 dollars / barrel, therefore energy will continue to push inflation down in the coming months.

The Harmonized Consumer Price Index stood at -0.6% in August, one tenth more than in July, and the average index for the Economic and Monetary Union decreased six tenths to -0.2%, according to the Eurostat advanced indicator. Thus, the negative differential with the euro zone is reduced to four tenths.

Looking ahead to the coming months, inflation will continue to register negative rates, albeit increasingly moderate, and will be conditioned by the behavior of oil prices and the drop in demand for some goods and services derived from the coronavirus crisis. For 2020 as a whole, we anticipate a slightly negative average CPI rate (-0.2%).



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