The Consumer Price Index (CPI) for August fell by 0.1% year-on-year according to figures published by the National Statistics Institute (Spanish acronym: INE), a five-tenths lower drop than in July. This rate coincides with the advance figure published by the INE at the end of last month. The easing of the drop in the CPI is mainly due to the lower decrease in energy prices, although rising prices of services and non-energy industrial goods (NEIG) will also have contributed to the lower figure. In month-on-month terms, the general CPI increased by 0.1% in August, compared with the 0.3% drop posted in the same month of 2015, due, to a large extent, to seasonal factors related to the hotel and catering industry.
Energy product prices in August fell by 9.1% year-on-year, nearly three points lower than July's figure (-12%). The slower rate of decline was due to both electricity prices (-11.3%, versus -14.9% in July) and motor and heating fuel prices (-8.3%, versus -11.1% in the preceding month).
Food price inflation in August stood at 1.6%, seven tenths lower than in the previous month, largely due to the slower deceleration of unprocessed food prices, down by two percentage points to 3.7%.
To a great extent this is due to smaller rises in fresh fruit prices (10.3%, 4.1 points less than in the previous month) and the price of pulses and fresh vegetables (2.3%, versus 9.3% posted in July). The inflation rate of processed food prices also slowed in August, albeit to a lesser extent, by one tenth, to 0.7%.
Core inflation (which excludes the most volatile elements of CPI, fresh food and energy) increased in August by two tenths to 0.9%, as a result of higher prices of NEIG (by three tenths, to 0.7%) and services (by two tenths, to 1.1%). In the NEIG category, we would highlight automobile prices, up by 4.6%, nearly two points more than in the previous month and, in services, the most important increases affected package tour prices (4.4% year-on-year after the slight increase (0.6%) posted in the previous month) and telephony services (3%, nine tenths more than in July).
In month-on-month terms the CPI grew by 0.1% in August compared to the 0.3% drop in the same month of 2015. This increase is due to the slower decline in energy prices (-1%, versus -4.3% the previous year). Services also contributed to the month-on-month increase; at 0.6% the figure was two tenths higher than in August the previous year. NEIG and food prices remained stable, versus the -0.3% and 0.6% respectively posted in August last year.
Within the food category, unprocessed food prices fell by 0.3% month-on-month in August after the 1.7% rise in the same month of 2015, while processed food prices rose slightly (0.1%), the same as in August 2015. In the unprocessed food category, the standout prices were for fresh fruit (down by -0.8% versus the 2.8% growth in 2015) and pulses and fresh vegetables (-2.1% after the 4.6% rise in August last year).
The year-on-year rate of the CPI has risen in August in all the autonomous regions, with four of them now posting positive inflation: Navarre (0.3%), Asturias (0.1%), Catalonia (0.1%) and the Basque Country (0.1%). In addition to these, Murcia, with unchanged prices, also recorded a rate higher than the national average. Extremadura and Andalusia's prices increased at the same rate as the national average (-0.1%), while of those posting lower than average rates, the lowest were recorded by La Rioja and Castile and Leon (-0.4% in both cases). The year-on-year constant tax CPI for August stood at -0.1%, the same figure as the general CPI.
The INE has also published the harmonised CPI (Spanish acronym: IPCA) for August, whose year-on-year rate was -0.3%, four tenths higher than in July. If we compare this rate with that advanced by Eurostat for the whole of the Eurozone (0.2%, the same as in July), the inflation differential in Spain's favour is down by four tenths to 0.5 percentage points.
In summary, August's CPI eased its year-on-year decline for the fourth month running and is now practically stabilised, mainly due to energy prices falling at a slower rate and, to a lesser extent, due to rising prices of services and NEIG. Core inflation is up by two tenths to 0.9%, and the inflation differential versus the Eurozone remains in Spain's favour at half a percentage point, with the resulting favourable impact on Spain's competitiveness and exports.
EFE