According to the data published by the Spanish National Statistics Institute (INE), the Consumer Price Index (CPI) rose by 0.1% year-on-year in June - one tenth of a point less than in May. This slight moderation in the rate of inflation mainly corresponds to foodstuffs and energy products, particularly to electricity and certain food items such as oils and fats, fresh fruit and potatoes, which continue to balance out the strong rise recorded last year. Non-energy industrial goods have maintained their annual rate, while services have increased slightly. The general CPI rate in June has not changed on the previous month.
The year-on-year rate posted by the price of unprepared foodstuffs fell by 1.1 percentage points in June to -3.8%. This moderation is due to various items such as potatoes and fresh fruit. If the strong increase posted a year ago as a result of the adverse weather conditions in the second quarter of 2013 is discounted, the annual rate has moderated significantly. The annual rate of fresh potatoes and potato preparations has fallen by 9.8 percentage points and fresh fruit by 4.1 points, to -19.7% and -9.6% respectively. In general, the majority of the items under the heading of fresh foods have seen a moderation in their annual rates.
The price of energy products recorded a year-on-year rate of 2.6% in June, four tenths of a point less than in May. This decrease is due to the electricity tariff since in that month consumers were reimbursed with the amounts overcharged in the first six months of the year. The annual rate of this item has fallen from 9.4% to 7.1%, with a monthly fall of 2.1%. The main component - solid and liquid fuels - rose by 0.3% year-on-year to 1.1%. This trend is in line with the increase in petrol prices.
Underlying inflation maintained at flat rate in June for the second consecutive month. This stability is down to the fact that the slight increase in services has been offset by a downward trend in prepared foodstuffs. Non-energy industrial goods have also maintained a flat rate year-on-year.
Services posted an increase in annual inflation of 0.1% in June to 0.3%, largely due to the heading of inter-urban public transport, which increased its annual rate by 0.8 percentage points, to 4.3%, as a result of a new hike in air transport prices (3.1%). Tourism and the hotel and catering industry maintained their annual rate of inflation at 0.5%. Prices of non-energy industrial goods fell by 0.5% year-on-year, the same as in the previous month.
Prepared foodstuffs, including beverages and tobacco, moderated their annual rate in June by 0.4% to 0.2%. This downward trend can be largely explained by the heading of oils and fats, which posted an annual rate of -14.4%, 2.6 percentage points lower than in May, and to a lesser extent by the lower annual change of other headings such as sugar, alcoholic beverages and milk.
The CPI remained stable in June on the previous month, due to the lower prices of prepared foodstuffs and non-energy industrial goods which fully offset the higher prices of services and fresh foodstuffs, while there was no change in energy products. Fresh foodstuffs increased by 0.4% in the month while prepared foodstuffs fell by 0.3%, mainly as a result of cheaper prices of potatoes (-4.3%), fresh legumes and vegetables (-3.3%), oils and fats (-2.7%) and sugar (-1.8%) and a 5.4% rise in fruit.
Services increased by 0.3%, mainly due to tourism and the hotel and catering industry (0.7%), and, within this heading, by the items of organised travel (4.3%) and hotels and other accommodation (3.6%), as well as inter-urban public transport (1.6%), particularly air transport (3.1%) and car insurance (1.9%). There was no change in the price of energy products in June, due to growth of 0.8% in its main item - solid and liquid fuels - which was wholly offset by the fall in the electricity tariff (-2.1%). The price of non-energy industrial goods fell by 0.4% month-on-month, mainly due to clothing and footwear (down by 1.3%) in anticipation of the summer sales.
Four of the 17 autonomous regions posted a higher year-on-year rate of inflation than the national average in June. The highest inflation was posted in the Balearic Islands and the Basque Country (both at 0.5%), followed by Catalonia (0.4%) and Galicia (0.3%). The CPI in Castile-Leon matched the national average (0.1%). The remaining autonomous regions posted rates of inflation below the national average: Aragon, the Region of Valencia, Madrid and La Rioja with flat rates and the rest with negative inflation; particularly worthy of mention being Extremadura as the most deflationist autonomous region (-0.5%).
The year-on-year CPI rate at constant taxes stood at 0.1% in June, the same as the general CPI rate, 0.1% lower than the previous month. Underlying inflation at constant tax rates posted a flat rate. The year-on-year rate for energy stood at 2.7%, compared with 3% in the month of May, while the year-on-year rate for unprepared foodstuffs stood at -3.8% (-2.7% in May). Within the core of underlying inflation at constant taxes, the prices of non-energy industrial goods stood at -0.5% year-on-year, prepared foodstuffs rose by 0.1%, compared with 0.5% the previous month, while the price of services increased by 0.3%, 0.1% higher than in May.
The INE also published the harmonised CPI (HCPI) for June, the annual rate of which is flat (0.2 points lower than in the previous month). When compared with the annual rate estimated by Eurostat for the Eurozone as a whole (0.5%), the inflation differential remains positive for Spain at 0.5 percentage points, 0.2% less than in May.
In summary, inflation moderated to 0.1 points in June due to the price trends of some of the most volatile items of the CPI, such as non-prepared foodstuffs, and energy prices, particularly the electricity tariff. This price containment is being welcomed as it will facilitate the ongoing wage moderation, which will have a positive impact on the competitiveness of domestic production and on exports. Similarly, it will enable the purchasing power of wages and pensions to be maintained, which will foster domestic consumption and have a knock-on effect on fostering the recovery in production and employment.
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