Spanish consumer prices accelerate fall in January

Spanish consumer prices accelerate fall in January
The decline in prices is due, in part, to the lower cost of food and non-alcoholic beverages. Photo of a woman in a supermarket: Shutterstock
Consumer prices in Spain dropped by 1.5 percent year-on-year in January, official data showed on Friday, their seventh straight month in negative territory, after falling 1.1 percent in December.

Spain's National Statistics Institute said the decline in prices was due mainly to falling oil prices and lower costs for food and non-alcoholic beverages.

The inflation data for the eurozone's fourth-biggest economy confirmed preliminary figures from the institute published on January 30th.

Economy Minister Luis de Guindos warned last month that Spanish consumer prices will remain negative "for a while" with inflation likely to average "zero" in 2015.

The chronically low level of inflation across the 19 nations that use the euro has raised concern the region could slip into deflation.

While falling prices may sound good for consumers, deflation can trigger a vicious spiral in which businesses and households delay purchases, throttling demand and causing companies to lay off workers.

The latest forecast published by the European Commission predicted consumer prices across the eurozone falling by 0.1 percent in 2015, before rising by
1.3 percent in 2016.

Last month the European Central Bank unveiled a massive trillion-euro bond purchase programme to ward off deflation and end stagnation in the eurozone economy.

The ECB's annual inflation target stands at just under 2.0 percent.