Spanish HICP inflation to remain in negative territory until the end of the summer

Spanish HICP inflation fell further from -0.5% yoy to -1.2% yoy in September, much lower than the market expectations (-0.7% yoy). As the INE does not give any details, we will have to wait for the final release to look at the details. However, it did mention that the bulk of this fall in inflation is explained by the decrease in fuel prices (gas and diesel) and electricity. 

"We do not expect any change in final Spanish HICP inflation from its flash estimate of -1.2% yoy in September", says Societe Generale.

Looking ahead, Spanish HICP inflation should remain in negative territory until the end of the summer, averaging -0.7% for 2015 and 0.6% in 2016. The core metric should be 0.2% in 2015 before rising to 0.9% in 2016.