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Confirmed: Spain's inflation hit zero in June

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10:33 CEST+02:00
Spain's inflation rate fell to zero in June, official data showed on Friday, as the eurozone battled to fend off the threat of a damaging deflationary spiral.

Consumer prices in the eurozone's fourth largest economy were unchanged from a year ago in June, capped by declining food, soft drink and electricity prices, the National Statistics Institute said, confirming an earlier estimate.

The inflation report, calculated in line with European Union norms, reflects weak domestic demand in Spain, still struggling with a 26-percent jobless rate even as the economy slowly expands after emerging gingerly in mid-2013 from a double-dip recession.

SEE ALSO: Inflation could kill off Spain's recovery: IMF

Broad, sustained falls in consumer prices can lead people to postpone purchases in the hope of future price declines, a reaction that brakes economic activity. The phenomenon can quickly degenerate into a vicious downward spiral that is notoriously difficult to reverse.

On June 5th, the European Central Bank announced an unprecedented package of measures, including negative interest rates for banks that want to deposit excess reserves with the central bank, in a fight to head off the threat of deflation in the single currency zone.

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