To a great extent, the 0.2% reduction in the year-on-year rate when compared with July can be explained by the trends posted by the most volatile components of the CPI - energy products and non-prepared foodstuffs, especially the former. When compared with the previous month, the general CPI rose by 0.2% in August, 0.1% less than in the same month of 2013. This was mainly caused by seasonal factors related to the tourism sector.
The year-on-year rate posted by the price of non-prepared foodstuffs fell by 0.2 percentage points in August, to -5.4%, a trend stemming from the significant fall in pork, poultry and lamb prices, as well as the price of fresh fruit. The downward trend in the year-on-year rate for fresh fruit prices increased by 1.4 points to -16.9%, as the strong increases posted a year ago due to poor harvests continue to influence these figures.
The price of energy products posted a year-on-year rate in August of -0.9%, 1.2 percentage points lower than in July. The main components under this heading - solid and liquid fuels and the electricity tariff - contributed to this deceleration to varying degrees. The year-on-year rate posted by the electricity tariff fell from 3.8% in July to 2.8% as a result of a 2.3% monthly increase in August this year, one point less than the increase posted in the same month of 2013 (3.3%). In turn, solid and liquid fuels posted a 1.3-point reduction in their year-on-year rate to -2.2%, a trend that sits in line with that of oil prices.
Underlying inflation (which excludes the most volatile components of the CPI, such as fresh foodstuffs and energy) remained flat in August for the fourth consecutive month. This stability was reflected in service prices and the cost of non-energy industrial goods, which remained at July levels, and, to a lesser extent, in the cost of prepared foodstuffs, the price of which fell slightly faster. Year-on-year inflation in service prices remained at 0.2% in August.
The headings posting the highest increases were tourism and the catering industry and inter-urban public transport, with rates of 0.3% and 7.1% respectively, up 0.1 and 1.3 points on those posted in the previous month. The upturn in the cost of inter-urban public transport can mainly be explained by the increase in air transport prices. The cost of non-energy industrial goods also posted an unaltered year-on-year rate in August, at -0.4%, with a slightly faster decrease under clothing and footwear (0.1%) that was offset by a faster increase in automobile prices.
Prepared foodstuffs, including beverages and tobacco, posted a 0.1-point fall in the year-on-year rate in August to -0.2%. This faster downturn can mostly be explained by price performance under the headings of milk, oil, alcoholic beverages and tobacco, for which the year-on-year rate fell by 6.3, 0.3 and 0.2 percentage points respectively.
In month-on-month terms, the CPI rose by 0.2% in August. This can be explained by the increased cost of services and fresh foodstuffs, which was partially offset by a moderation under non-energy industrial goods. The cost of prepared foodstuffs and energy products remained unchanged when compared with July, while that of fresh foodstuffs rose by 0.7% due, to a great extent, to increased prices for fresh fruit (3.2%), fresh fish (2.3%) and lamb (0.5%).
The cost of services increased by 0.4% month-on-month, mainly due to tourism and the hotel and catering industry (1.3%), and, under this heading, the components of organised travel (5.4%) and hotels and other accommodation (0.8%), as well as inter-urban public transport (1.5%), particularly air transport (2.9%). In turn, there was no change on the previous month in the price of energy products, due to the fact that the fall in solid and liquid fuels (-0.9%) was offset by the increase in the electricity tariff (2.3%). The cost of non-energy industrial goods fell by 0.3% month-on-month, which was particularly affected by the fall in clothing and footwear (-1.3%) due to the summer sales, and was partially offset by the increase in automobile prices (0.4%).
Five of the 17 autonomous regions posted a higher year-on-year rate of inflation than the national average in August. The highest rates of inflation were posted in the Balearic Islands (flat rate), Catalonia (-0.1%), Madrid and the Basque Country (-0.3%) and Galicia (-0.4%). The remaining autonomous regions posted rates of inflation below the national average. Extremadura (-1.1%), Castile-La Mancha (-1%), Murcia (-0.9%), Andalusia and Navarre (-0.8%), Asturias, La Rioja, the Canary Islands and Castile-Leon (-0.7%) and Cantabria, Aragon and the Region of Valencia (-0.6%).
The year-on-year CPI rate at constant taxes stood at -0.5% in August, the same as the general CPI rate, 0.2% lower than the previous month. Underlying inflation at constant tax rates posted a flat rate. The year-on-year rate for energy stood at -0.9%, compared with 0.3% in the month of July, while the year-on-year rate for non-prepared foodstuffs stood at -5.4% (-5.2% in July). Within the core of underlying inflation at constant taxes, the prices of non-energy industrial goods remained at -0.4% year-on-year, prepared foodstuffs fell by 0.2%, compared with a flat rate in the previous month, and the price of services remained at 0.2%, as was the case in the previous month.
The INE also published the harmonised CPI (HCPI) for August, the year-on-year rate of which stands at -0.5% (0.1 points lower than in the previous month). When comparing this rate with that estimated by Eurostat for the Eurozone as a whole (0.3%), the inflation differential remains positive for Spain at 0.8 percentage points, unchanged from the figure posted in July.
In summary, the rate of inflation fell in August due to price trends in some of the most volatile components, while underlying inflation stabilised for the fourth consecutive month. The reduction to general inflation is therefore considered to be temporary within a general overarching moderation of prices. This situation reflects positively on the purchasing power of private incomes and consumption. Similarly, it facilitates the continued wage moderation and competitiveness efforts, with the corresponding positive impact on exports, thus guaranteeing the continued recovery of production and job creation.
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