Prices fall in Spain for third straight month
Consumer prices fell 0.9 percent, raising concerns that Spain may be in the early grip of deflation.Madrid – Spanish consumer prices fell 0.9 percent in May from the same time last year in the third monthly decline in a row, official data showed Wednesday, raising concerns that the country's worst recession in decades will lead to deflation.
The national statistics institute had estimated on 28 May that consumer prices would post a fall of 0.8 percent in May as companies cut prices in the face of the sharp economic downturn in Europe's fifth-largest economy.
In March, Spain posted its first 12-month drop in prices since the national statistics institute INE began tracking inflation in 1961, with a 0.1-percent decline that month. Prices dropped another 0.2 percent in April.
Spanish inflation, which has generally been higher than the eurozone average over the past decade, is now slowing more sharply than the rest of the region as its economy slumps.
Deflation, characterised by a prolonged period of falling prices, can be harmful to the economy as it often leads consumers and companies to hold back on spending as they wait for even better deals.
In May, Spanish Finance Minister Elena Salgado said in a radio interview that inflation was expected to turn positive again at the end of the year.
Spain entered into its first recession in 15 years at the end of 2008 and unemployment has soared to 17.4 percent in the first quarter of 2009, the highest level in the 27-nation European Union.
AFP / Expatica