Spain’s Inflation Falls To 2.3%

Spain’s Consumer Price Index (CPI) decreased by seven tenths in March to 2.3% year-on-year, according to figures published by the National Statistics Institute (Spanish acronym: INE). This figure is the same as the one advanced by the INE at the end of last month.

This performance was mainly due to the slower growth of energy product prices and, to a lesser extent, the deceleration in prices of unprocessed food and services. In month-on-month terms, the general CPI stabilised in March (0.0%) compared to a 0.6% increase in the same month of 2016.

Energy product prices grew by 11.7% year-on-year in March, 5.1 points less than in February. The reason behind this trend is the slower growth rate of fuel and lubricant prices, which dropped from 18.5% year-on-year in February to 12.8% in March, and the slowdown in electricity prices, down by 6.4 points to 12.5%.

Food prices grew 1.4% compared to the same month in 2016, three tenths less than in February. The inflation of unprocessed foods stood at 4.3%, 1.1 points lower than the previous month, largely due to a slowdown in prices of pulses and fresh vegetables (15.4 points, to 6.8%), partly offset by higher growth in fresh fruit prices (from 7.6% in February to 10.3% in March). Prices of processed food, drinks and tobacco increased slightly in March by 0.1%, one tenth more than in February; of particular note was the performance of oils and fats which slowed their deceleration by 0.9 points to 0.7%.

Core inflation (which excludes the most volatile elements of CPI, fresh food and energy) fell by one tenth in March to 0.9%. This was mainly due to the deceleration in the prices of services by two tenths to 1.1%, in which the trend in the prices of package tourism played a significant role, dropping from 5.9% in February to 0.1% in March. This was largely due to Easter week; last year it fell in March and this year it falls in April. Meanwhile prices of non-energy industrial goods (NEIG) grew by 0.6%, the same as the previous month.

In month-on-month terms the CPI stabilised in March after the 0.6% increase recorded in March 2016. Broken down by components, energy product prices fell by 2.6%, after the 1.8% rise in the previous year, while prices of services grew by 0.2%, two tenths less than in March 2016. NEIG prices increased by 1.1%, the same as in March last year, while food prices shrank by 0.3% versus the price stability recorded in March 2016. In the food category, prices of unprocessed food posted a month-on-month drop of -1.2% (versus -0.2% the previous year), while processed food prices grew by 0.2% (versus 0.1% in March 2016).

The year-on-year constant tax CPI fell in March in all autonomous regions. The greatest drops were posted in Extremadura and Murcia (one point in each case, to 1.9% and 2%, respectively), while the smallest drop in inflation was recorded by the Canary Islands (four tenths, to 2.1%).

The year-on-year CPI at constant taxes was 2.3% in March, the same as the general CPI.


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