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Spanish prices higher amid EU deflation fears

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Spanish prices higher amid EU deflation fears
Consumer prices rose by just 0.3 percent in Spain over the year to January, the National Statistics Institute said. Photo: fotoluiscmg/Flickr
14:28 CET+01:00
Spain posted on Friday a sluggish rise in consumer prices in January as the spectre of deflation hung over the eurozone economies.

Consumer prices rose by just 0.3 percent in Spain over the year to January, the National Statistics Institute said.

Low prices can be good news for consumers.

But a broad, sustained decline in prices can lead shoppers and businesses to postpone purchases as they wait for prices to tumble even further.

The result can push an economy into a downward spiral.

International Monetary Fund head Christine Lagarde warned last month that while growth in the global economy was picking up, there were "rising risks" of the "ogre" of deflation, or falling prices.

European Central Bank chief Mario Draghi last week said the eurozone was not in a deflationary period but that protracted low inflation "is a risk by itself and warrants close monitoring by the ECB".

The European Central Bank targets an inflation rate of about 2.0 percent in the eurozone.

The inflation rate in Spain, which crawled out of a two-year economic downturn in the second half of 2013, was well below the eurozone average of 0.7 percent in January.

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