Prime Minister's Office of Spain : CPI stands at 0.3% in December

The 0.1% increase in the year-on-year CPI in December reflects the price performance among energy products and unprepared foodstuffs, the most volatile components of the index. In contrast, all other major components of the CPI posted reduced year-on-year results: prepared foodstuffs by -0.2%; and services and non-energy industrial goods by -0.1%.

Energy products posted a year-on-year rate of 0.2%, compared with -0.7% in November, thus ending a five-month run of falling inflation under this heading. Solid and liquid fuels, the main component under this heading posted a year-on-year increase of 0.4% in November to 1.7%. This result stems from a month-on-month increase (0.9%) in December 2013, compared with a 0.4% decrease in the corresponding month in 2012.

The year-on-year rate posted by non-prepared foodstuffs has ended the downward trend in the three preceding months, rising 0.2 points to 0.6%. This slight upturn is mainly due to the higher prices of fresh vegetables, the year-on-year rate for which rose by 8.6 points to 2.8%. In contrast, it is worth noting the falling inflation posted by fresh fruit, the year-on-year rate for which dropped by almost two percentage points to 2.4% and continues to correct the strong upturn in these products posted in the May-August period last year.

Underlying inflation, also referred to as the stable nucleus of prices has fallen by 0.2 points in December to 0.2%, stemming from price performance in its three main components. The year-on-year rate posted by non-energy industrial goods dropped by 0.1 points from -0.4% in November to -0.5%, mainly due to clothing and footwear with a year-on-year drop of 0.3 points to a flat rate. This performance reflects a stronger (or earlier start) sales period in December 2013 when compared with the same month in the previous year. The cost of services remained steady at a flat year-on-year rate, compared with a slight increase of 0.1% in the previous month. This fall in inflation stems from tourism and the hotel and catering industry, which posted a year-on-year rate of 0.2% - 0.3 points lower than in November. Urban and interurban public transport also contributed to this fall in inflation.

Prepared foodstuffs, including beverages and tobacco, posted a 0.2% fall in its year-on-year rate to 2.3%. This deceleration is mainly due to the trend posted by oils and fats, which show a downturn in their year-on-year rate of almost 4 points (to 3.2%). To a lesser extent, the result was also influenced by the drop seen in the year-on-year rate posted by other components, such as alcoholic beverages and tobacco.

The 0.1% month-on-month increase in December in the overall index rate was especially affected by price performance in unprepared foodstuffs, energy products and services. The cost of unprepared foodstuffs rose by 1.3% - a 16.3% increase under fresh vegetables - and sheepmeat with an increase of 1.5%. Energy products rose by 0.7% month-on-month, as a result of a 0.9% rise in the cost of solid and liquid fuels. Finally, the cost of services rose by 0.2% month-on-month - mainly due to tourism and the hotel and catering industry (0.8%) and interurban public transport (0.3%).

Six of the 17 autonomous regions posted year-on-year rates of inflation above the national average, with the highest rates posted by Cantabria and the Basque Country (0.6%), followed by Galicia, Castile-Leon and the Balearic Islands (0.5%). Inflation in Andalusia was in line with the national average, while inflation in Aragon, Asturias, Catalonia, Madrid, Castile-La Mancha and Valencia stood at 0.2%. Inflation in La Rioja stood at 0.1%, while inflation in Extremadura and Navarre remained unchanged. Ceuta, the Canary Islands and Melilla posted negative rates of inflation (-0.1% in Ceuta and -0.4% in the Canary Islands and Melilla).

In December, the year-on-year CPI rate at constant taxes remained unchanged from the previous month - 0.2% - and underlying inflation at constant taxes dropped by 0.1 points to also stand at 0.2%. Within the index at constant taxes, the year-on-year rate for energy stands at -0.1% (-1% for the previous month) while the year-on-year rate for unprepared foodstuffs stands at 0.6% (0.4% in November). Within the nucleus of underlying inflation at constant taxes, the prices of non-energy industrial goods stood at -0.5% year-on-year (-0.4% in the previous month), prepared foodstuffs rose by 2.1% (2.3% last month) and service prices remained stable, as opposed to 0.1% in November.

The INE published the harmonised CPI (HCPI) for December, the annual rate of which stands at 0.3%, repeating the previous month. When compared with the annual rate estimated by Eurostat for the Eurozone as a whole (0.8%), the differential remains positive for Spain at 0.5 points, albeit 0.1 points lower than in November.

In short, the year-on-year rate of inflation in December remained at a very moderate level, posting 0.3% year-on-year. Inflation is forecast to remain low over the coming months and to remain lower than the figures posted by other Euro partners, with the corresponding impact on competitiveness and exports. This will also have a positive effect on the purchasing power of workers and pensioners, with the corresponding effect on consumption. Hence, these are positive data that reflect the continued correction of a long-term imbalance in the Spanish economy that will facilitate a recovery of economic activity and employment.