SHARE
COPY LINK

EUROZONE

Spanish prices higher amid EU deflation fears

Spain posted on Friday a sluggish rise in consumer prices in January as the spectre of deflation hung over the eurozone economies.

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

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.

Member comments

Log in here to leave a comment.
Become a Member to leave a comment.

EUROZONE

Industrial output notches up ‘soft’ decline in March

The plunge in recession-wracked Spain's industrial production eased in March to a 0.6 percent year-on-year decline, official data showed on Thursday.

Industrial output notches up 'soft' decline in March
The March fall in Spain's industrial output was driven by weakening production of durable consumer goods. File photo: Ben Husmann

The seasonally-corrected figure from the National Statistics Institute followed a 6.9 percent fall recorded for February in the eurozone's fourth biggest economy.

It was the softest decline since August 2011, just before the latest recession started.

Like February's figure, the March fall was driven by weakening production of durable consumer goods, the institute said.

Production in the capital goods and energy sectors strengthened by 3.3 percent however.

Industrial production had fallen by 4.9 percent in January, 7.1 percent in December and 7.0 percent in November.

In its efforts to strengthen the public finances Spain's conservative government has imposed tough economic reforms that have curbed consumption.

It forecasts the economy will contract by 1.3 percent this year.

SHOW COMMENTS