Inflation drops below zero due to fall in electricity prices

A report published by the National Statistics Institute (INE) has revealed that in January the Consumer Price Index, the official measure of inflation, dropped 1.9% from the previous month due to falling prices of electricity.

This means that last month, inflation registered in negative figures once again, at -0.3% – something which financiers have tried to avoid.

The report also showed that the Consumer Price Index was 0.3% lower than the rate registered 12 months ago.

Last year closed with inflation at 0% at the end of December 2015.

The reason for the drop in the inflation rate has mainly been attributed to the fall in electricity prices in homes, which has been reduced 6% annually.

At the beginning of last year, electricity prices actually went up, but this January they are much lower than they were a year ago.

According to the INE, inflation is now at the same rate that it was in November 2015, although it did claw back negative figures that it had been registering since July 2014.

In January 2015, inflation sat at -1.3%, the lowest rate since July 2009. Since then, the IPC only registered positive figures in June and July last year (in both cases +0.1%). By the end of the year it had increased to 0%.

At the start of this year, food prices and services remained the same, but the reduction in the IPC also came about because of cheaper prices of pharmaceutical products and, to a lesser extent, cars, clothing and shoes.

Prices dropped in almost every autonomous region, but the biggest reductions were registered in the Canary Islands and Melilla (-0.7%), followed by Castilla y León, Castilla-La Mancha and Extremadura (-0.6%). The only region where prices went up was in the Basque Country, while in Cataluña they remained stable.

Source: www.expansion.com, www.antena3.com