Catalan inflation rate fell this July, placing the interannual CPI at 0%

Madrid (ACN).– In Catalonia prices fell by 8 decimal points this July compared to a year ago and interanual inflation rate stood at 0%, according to the Spain's Statistical Institute (INE). This statistic uses prices of fresh food and petrol as its indicators, which increased faster in the Autonomous Community in July 2013. This is a contrast to Spain as a whole, where prices have fallen by 9 decimal points this July, placing the Consumer Price Index (CPI) in negative figures, as low as -0.3%. This level of negative inflation has not been recorded in the country since September 2010, when the CPI lay at -0.7%. The contrast in inflation rates indicates that the Catalan CPI is able to resist falling into negative numbers, despite what has happened to Spain's economy this year, which already registered negative CPI statistics this March. 

The Catalan economy managed to prevent its inflation rates falling into the negative figures, which has not happened since October last year, when the CPI fell to -0.1% whilst Spain as a whole saw -0.3% inflation rates.

This July the falling prices in annual terms were principally affected by the three main sectors of the Consumer Price Index (CPI): transport, housing and fresh food, ordered from highest to lowest in impact.

Catalonia's transport sector has shown a positive inflation rate of 0.1%, lower than the 1.1% which was registered last June. This decrease is explained by the stability of the price of fuel and lubricants this July, a contrast to the increase in these commodities in July 2013.

The second sales area which has influenced the falling annual inflation rate has been the housing sector, which includes the price of electricity. The interanual CPI change in this area has been positive, at 1.6%, also well below the rate of the previous month, which was 2.4%. These falling statistics were influenced by the lowering of electricity prices this year, in contrast to last year.

Falling prices of fresh fruit, potatoes and oil

The final influence on Catalonia's CPI statistics has been the sector of fresh foods and non-alcoholic beverages, whose prices fell at an interanual rate of -1.2%, whilst last June the fall was less severe at -0.9%

This sector follows the general downward trend in prices of fresh fruits, as the costs of this food group increased at a slower rate this July than the same month last year, whilst there was also a fall in the price of potatoes and dairy products along with a reduction in the price of oils and fats.

Another area which has caused prices to fall is linked to the tourism sector, and is grouped under the heading 'leisure and culture'. This rate decreased by -0.9% this July, when in June the rate was registered as -0.1%.

Tabacco has also influenced the stability of prices this July because costs have risen at a slower rate than in July 2013. This caused the sector of alcoholic beverages and tobacco to register an interanual rate of 0.3% this July, whilst in June it was 2%.

Summer sales

In relation to the price drop in monthly terms from June to July, a decline has been consistent throughout the month from the start of the sales season on the first of July, especially in the clothing and footwear sector. In Catalonia this sales area shows a decrease in prices of -13.4%, with a total reduction of -16.1% for the whole of 2014.

Sales prices have also been falling in the sector of household items, which has registered a fall of -0.6%. Another area which has been dragging down the prices of the housing sector is the falling cost of electricity. The telecommunications market, which lowers its prices for the summer season, has also caused the value of the communications sector in Catalonia to fall by -1.2% in relation to June.

Underlying Inflation

However, underlying inflation rate, which is calculated without taking into account the prices of petroleum products or unprocessed fresh food, has been placed at 0% for the Spanish economy as a whole, a rate similar to that which was recorded in June.

The only Autonomous Communities which have managed to avoid negative inflation have been the Balearic Islands and Catalonia. The Balearic Islands, which lie to the east of the Iberian Peninsula, recorded a positive annual inflation of 0.1%, and in Catalonia the underlying inflation rate settled at 0%. The annual underlying inflation rate which fell furthest into negative figures was found in the Autonomous Communities of Navarra and Extremadura, which registered a -1% drop.