Inflation set to rise over summer

8th June 2004, Comments 0 comments

8 June 2004, MADRID – Spain's level of inflation is set to rise in the next two months, the Treasury Minister said Tuesday.

8 June 2004

MADRID – Spain's level of inflation is set to rise in the next two months, the Treasury Minister said Tuesday.

Pedro Solbes said inflation had increased by 3.4 percent during May and would continue to rise for at least the next two months.

But he added inflation was expected to fall by the end of the year and reach 2 percent by 2005.

The main cause in the rise in prices, said Solbes, was the increase in the price of petrol in the last month.

But he added that the increase in fresh food and tobacco prices had also contributed to inflation.

Solbes made these comments in the economics newspaper Cinco Dias (Five Days) where he pointed to the need to "pay attention to the evolution of prices" which were "veering away from the objectives fixed by the Central European Bank".

He said this had "drained" by 1 percent the rise of Spain's Gross National Product.

Meanwhile, the minister was criticised for apparently reneging on electoral promises to change the capital gains tax.

In the same article, Solbes said he would not change this form of taxation at this point.

The move was criticised by Right-wing opponents of the new Socialist government who claimed the party said capital gains taxes "will form part of the basis of taxation, receiving the same treatment as all forms of income tax."

But Solbes said: "Before we tackle change, we have to see how the European model
changes.

"We are going to see how this develops in the next period and then we can study what to do."

[Copyright EFE with Expatica]

Subject: Spanish news

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