The Consumer Price Index (CPI) fell by 0.4% in August year-on-year, according to figures published by the National Institute of Statistics (Spanish acronym: INE). This rate is five-tenths lower than last July and matches the figure advanced by the INE at the end of August. This fall in inflation can be explained by the falling energy prices and, to a lesser extent, the moderation of service prices and non-energy industrial goods, which was partially offset by the upward trend in food prices, especially non-processed foods.
In August, energy product prices were down by 9.8% year-on-year, four points lower than last month's figure. This decrease was caused by all components of the energy index. The year-on-year rate for solid and liquid fuels fell by 3.4 points to -14.1% due to the falling cost of both liquid fuels and gas. Electricity posted a monthly decrease of 3.3%, versus the 2.3% increase in the previous year, which gives a year-on-year reduction of six points to 2.6%.
The year-on-year rate of change in non-processed food prices has increased significantly, by one percentage point in August, to 2.7%, mainly due to the increased cost of fresh pulses and vegetables and fish.
Core inflation (which excludes the most volatile components of the CPI such as fresh food and energy) fell in August by one tenth to 0.7%. This moderation stems from the price of non-energy industrial goods, which decreased by an annual rate of one tenth to 0.3%, and by the price of services, with an annual growth rate of 0.8%, one-tenth lower than the previous month. This moderation was partially offset by the upward trend in processed foods. The deceleration in service prices is due to tourism and the hospitality industry, the year-on-year rate of which fell by two-tenths to 1.2%, and by the moderation in inter-urban transport prices, the year-on-year rate of which fell from -0.8% in July to -1.8% in August.
The year-on-year rate for processed foods, beverages and tobacco rose by two-tenths to 1.4%. This was mainly influenced by oil. This product is 30.3% more expensive than one year ago and 4.4 points higher than last month. In contrast, milk and tobacco prices have fallen, which partially offset the increased cost of oil.
In month-on-month terms, the CPI fell by 0.3% in August, compared with a 0.2% increase in the same month of 2014. This decrease can be explained by a 4.3% reduction in the price of energy products stemming from both a 3.3% fall in electricity prices and a 4.7% fall in solid and liquid fuel prices, in line with the trend seen in oil prices. Non-energy industrial goods also contributed (-0.3%), especially clothing and footwear (-1.3%) due to the summer sales.
The year-on-year rate of inflation fell in August in all autonomous regions. The reduction was higher than the national average in five: The Balearic Islands (0.2%), Catalonia (-0.1%), the Basque Country (-0.2%), the Region of Valencia (-0.3%) and La Rioja (-0.3%). Andalusia's inflation was at a par with the national figure. In the other autonomous regions, inflation was below the national average, with the greatest decreases being seen in Extremadura and Castile-La Mancha (-0.9%), and Castile-Leon and Cantabria (-0.8%). Meanwhile, the annual CPI rate at constant taxes in August stood at -0.4%, the same as the general CPI.
The INE also published the harmonised CPI (HCPI) for August, the year-on-year rate of which stands at -0.5% (five-tenths lower than in the previous month). If we compare this rate with that estimated by Eurostat for the Eurozone as a whole in August (0.2%, the same as in July), the positive inflation differential for Spain would rise by half a point to -0.7 percentage points.
In short, the annual CPI rate of variation fell by half a point in August, after six months of back-to-back rises. This decrease was mainly caused by the price of energy and, to a far lesser degree, non-energy industrial goods and services. The core rate fell by one-tenth to 0.7%. The favourable inflation differential for Spain when compared with the Eurozone rose significantly, having a positive effect on the competitiveness of the Spanish economy and continuing to benefit exports, production and employment.
EFE