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Cheaper package holiday prices contribute to inflation fall 

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Spanish inflation has slowed to 1.9 per cent due to energy and package tour prices.

The Consumer Price Index (CPI) grew in May 2017 by 1.9 per cent year-on-year, seven tenths less than in April, according to figures published by the National Statistics Institute.

This rate confirms that advanced by the INE at the end of last month.

?The performance was mainly due to lower fuel and lubricant prices and a drop in package tour prices now the Easter campaign is over. In month-on-month terms, CPI fell by 0.1 per cent in May, compared to the 0.5 per cent increase in the same month of 2016.

Prices of energy products increased in May by 8.3 per cent year-on-year, 3.7 points less than in April. This trend is due to the easing of fuel and lubricant prices, which fell from 11.5 per cent year-on-year in April to 4.9 per cent in May. Meanwhile, gas prices rose by 1.7 points to 8.3 per cent, and the year-on-year performance of electricity prices remained unchanged at 16.2 per cent.

Food prices grew by 1.2 per cent in May, the same as in April. Unprocessed food prices increased by 2.8 per cent, six tenths below last month’s figure, driven by the price of pulses and fresh vegetables (down by 3.8 points to 3.3 per cent) and, to a lesser extent, fresh fruit (down from five per cent in April to 3.2 mper cent in May). Processed food, drinks and tobacco prices increased by 0.4 per cent in May, two tenths more than in April, with a significant rise in the price of oils and fats, up from 0.5 per cent in April to 2.3 per cent in May.

Core inflation (which excludes the most volatile elements of CPI, fresh food and energy) eased by two tenths in May to one per cent, due to the easing of prices of services and, to a lesser extent, of non-energy industrial goods (NEIG), partly offset by the faster growth rate of processed food prices.

Prices of services eased by four tenths to 1.7 per cent, as a result of the performance of package tours, where inflation dropped from 20.9 per cent in April to 7.9% in May. The Easter calendar effect played a part in this trend; in 2017 Easter fell in April while in 2016 it fell in March. Meanwhile, NEIG prices slowed by two tenths to 0.1 per cent, on the back of falling prices of clothing and footwear which went from 0.3 per cent in April to 0.1 per cent in May.

Year-on-year CPI shrank in May in all autonomous regions, with the biggest fall over April’s figure being recorded by Asturias (one point to 1.6%), and the smallest falls, both by three tenths, being recorded by the Canary Islands (2% in May) and Extremadura (1.7%).