Flash June Spanish inflation at -0.2% yoy

The bulk of the rise in  flash Spanish HICP inflation came from a rise in the prices paid for services, more specifically transport services, and prices paid for food, alcohol and tobacco. The energy- and goods component also eked out a rise, albeit at a lesser pace.

As we move into the summer doldrums, the seasonality effects should become more profound again, especially for the goods price component which is expected to experience negative pressures over the summer months as many stores put older inventory they have in store on sale. 

"The flash reading of Spanish HICP inflation is expected to print one tick higher in June, at -0.2% yoy, owing partially to higher fuel prices (1.3% mom). The other metrics should remain broadly stable", says Societe Generale.

The zenith of these negative pressures is expected to be reached in July from which point goods prices should rebound again.

"Looking ahead, Spanish HICP inflation should remain in negative territory until the end of the summer, averaging -0.4% for 2015 and 1.1% in 2016. The core metric should be 0.2% in 2015 before rising to 0.8% in 2016", added Societe Generale.