January 3, 2014 / 11:10 AM / 7 years ago

Italy, Spain December inflation underlines price weakness

A woman shops at a supermarket in Milan, September 5, 2012. REUTERS/Stefano Rellandini

ROME (Reuters) - Consumer inflation in Italy eased slightly in December on an annual basis and remained stable in Spain, according to preliminary data on Friday which highlighted concern at continuing weakness in prices in the euro zone.

European Central Bank President Mario Draghi said at the weekend that the ECB wanted to ensure that inflation in the euro zone did not drift into what he called a “danger zone” below one percent.

But with both Italy and Spain struggling to emerge from recession, the data underlined the sickly state of their economies with consumer spending held back by soaring unemployment and declining incomes.

Annual Italian EU-harmonised consumer price inflation (HICP) for December declined to 0.6 percent from 0.7 percent in November, slightly under a forecast for a 0.7 percent rise in a Reuters survey of analysts. Over the year as a whole, the average inflation rate dropped to 1.3 percent, compared with 3.3 percent in 2012, statistics agency ISTAT said.

Month-on-month, prices showed a 0.3 percent rise on an EU-harmonised basis, compared with a -0.3 percent drop the month before, the data showed.

The figures came after Spain’s National Statistics Institute (INE) reported that Spanish EU-harmonised consumer prices rose by 0.3 percent year-on-year in December, compared with a Reuters forecast of 0.4 percent and previous reading of 0.3 percent.

INE data also showed Spain’s national consumer price index rose by 0.2 percent in December on an annual basis, the same rate as in the previous month.

On average of the whole of 2013, the Italian data showed decelerating prices in almost all segments, underlining the sluggishness across the Italian economy.

Prices for transport services rose 1.2 percent over the year against a 6.5 percent rise in 2012, housing and utilities prices rose 2 percent against a 7.1 percent rise in the previous year and food prices rose 2.2 percent against 2.6 percent the previous year.

Reporting by James Mackenzie and Elizabeth O'Leary; Editing by Giles Elgood

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