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Spanish inflation eases in May, feeding eurozone deflation worries
May 30, 2014 / 7:47 AM / 4 years ago

Spanish inflation eases in May, feeding eurozone deflation worries

MADRID (Reuters) - Spanish national consumer price rises slowed in May largely due to falls in food and drink, preliminary data showed on Friday, heightening fears of deflation risk in the euro zone.

An illuminated euro sign is seen in front of the headquarters of the European Central Bank (ECB) in the late evening in Frankfurt January 8, 2013. REUTERS/Kai Pfaffenbach

Prices rose just 0.2 percent in May from a year earlier, down from 0.4 percent in April, data from the National Statistics Institute said. Prices had recovered during the busy Easter period in April after posting a drop in March.

Some economists fear consumers in the euro zone may delay spending plans on the assumption that goods and services will get cheaper. The European Central Bank, however, insists it sees no threat of deflation and is poised to cut its headline interest rate.

Spanish price growth has not topped 1 percent for nine months. Italy’s May inflation is due later on Friday and is forecast at 0.5 percent.

However, Spanish retail sales rose more than forecast in April, data showed earlier this week, as the euro zone’s fourth largest economy emerges from recession after mostly falling for three years during a severe economic downturn.

Spanish EU-harmonised consumer prices rose by 0.2 percent year-on-year in May, Friday’s data showed, in line with a consensus forecast and compared to a previous reading of 0.3 percent.

Reporting By Sonya Dowsett; Editing by Tracy Rucinski/Jeremy Gaunt

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