The Spanish economy continues in deflation in September, accumulating a six-month drop in the CPI

  • The unprecedented economic crisis in the Spanish economy pushes prices down.
  • In September, inflation stood at -0.4%, one tenth higher than the previous month, due to the lower decrease in the prices of energy products and the increase in the prices of unprocessed food.

In the month of September, the interannual rate of the Consumer Price Index (CPI) increased one tenth to -0.4%, accumulating six months in negative. Inflation moderates its rate of decline, due to the lower decrease in the prices of energy products and the increase in the prices of unprocessed food.

For its part, core inflation slows the slowdown that began in July and remains at 0.4%, after a long period of stability at around 1%. Analyzing its components, it is observed that they remain at very moderate rates. Thus, the prices of Services increased one tenth to 0.3%, the prices of Industrial Goods without energy products decreased their rate of variation one tenth to 0.2%, and Food with processing, beverages and tobacco decreased one tenth its interannual variation to 1.1%.

The prices of unprocessed foods, however, increased their variation rate seven tenths to 4.2%, and continued to be the most inflationary component of the basket, with the most intense increases concentrated in the headings of fresh fruits, meat sheep and legumes and vegetables.

Energy prices in September continued to moderate their rate of decline. Specifically, the interannual rate this month of the prices of energy products was -8.5%, eight tenths less than the previous month (-9.3%).

In September, the price of oil broke the upward trend of recent months. Brent crude stood at $ 40.7 / barrel on a monthly average, -10.2% lower than the August price, while in year-on-year terms the decline sharpened to -35.9%. Among the factors that have influenced the decline in prices, the cut in forecasts for world oil demand by the International Energy Agency and OPEC stands out, given the doubts about the intensity of the recovery in oil. economy. For the next few months it is estimated that prices will remain relatively stable, between $ 40 / barrel and $ 50 / barrel at least until mid-2021, so energy will continue to push inflation down.

The Harmonized Consumer Price Index remained at -0.6% in September and the average index for the Economic and Monetary Union fell one tenth to -0.3%, according to the Eurostat advanced indicator. Thus, the negative differential with the euro zone continues to decline and stands at three tenths, compared to 1.1 percentage points in April. Looking ahead to the next few months, inflation will continue to register negative rates, although increasingly moderate and will be conditioned by the behavior of oil prices and the fall 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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