Price competitiveness of the economy improved against the OECD in the first quarter 2017

While the CPI is the reference most commonly used to analyse price trends, many of the products and services it considers are either not exportable or their importance to export performance is negligible. For this reason Unit Value Indices (UVIs) are also used; this is a more reliable reference for export prices because they only count products and services sold abroad, weighted according to their importance to exports as a whole. UVIs are slower to be published than the CPI, so data provided using these indices refer to the previous quarter.

CTI measured by CPI

Figures for the first quarter 2017 show that price competitiveness of Spain versus the Eurozone worsened slightly (the CTI rose by 1%) after thirteen consecutive quarters of improvement and a last quarter of stability, because Spanish prices grew slightly faster than the average prices of other member countries. Spain also lost competitiveness against non-Eurozone EU countries, mainly due to the exchange rate resulting from the depreciation of the pound in the first quarter of the year.

Against the OECD, competitiveness improved (-0.3%), also due to the depreciation of the euro, which offset the higher price increase in Spain. This makes four consecutive quarters of increased competitiveness versus this zone. The improvement is especially noticeable versus OECD countries not forming part of the European Union.

With regard to BRIC countries (Brazil, Russia, India and China), the CTI fell by 4.2% year-on-year, confirming and reinforcing the trend that began in the last quarter of 2016 after three quarters of loss of competitiveness. The improvement was due to the appreciation of the currencies of these countries against the euro, which offset part of the losses suffered in the previous year.

CTI measured by UVIs

In the cumulative figure for 2016 there was a gain in competitiveness against the Eurozone, the destination of 50% of our goods, while competitiveness weakened versus non-Eurozone EU countries due to the performance of exchange rates. Competitiveness also worsened against OECD countries, due to prices and, to a lesser extent, exchange rate changes.

In the last quarter of 2016 the index reflected the results during the year as a whole. The CTI measured by Unit Value Indices improved versus the Eurozone (down by 0.3%) and worsened against the EU as a whole. This loss of competitiveness was solely the result of the appreciation of the euro, since Spanish export prices fell by more than the average export prices of the rest of the EU-28 countries.

Against OECD countries the CTI grew by 0.5% in the last quarter of 2016, mainly due to rising exchange rates and the performance of non-Eurozone EU countries (once again due to the performance of the pound).