Rising inflation threatens buoyant economy

17th February 2006, Comments 0 comments

17 February 2006, MADRID — Inflation rose to 4.2 percent last month raising fears the country's loss of competitiveness abroad could threaten its thriving economy.

17 February 2006

MADRID — Inflation rose to 4.2 percent last month raising fears the country's loss of competitiveness abroad could threaten its thriving economy.

Figures released by the National Statistics Institute (INE) showed inflation fell 0.4 percent from December to January.

But yearly inflation rose from 3.8 percent to 4.2 percent in the same period.

This is the highest rate of inflation since 2001.

Underlying inflation, which does not include factors which change rapidly like fresh food and energy prices, stood at 2.9 percent.

But the biggest worry was it meant the difference between Spanish inflation and the eurozone  average stood at 1.8 points, compared with 1.2 last year.

As most of Spain's exports go to other European countries, this means its goods and services are more expensive in comparative terms.

And the country's trade deficit has risen to record levels.

But domestic demand pushed Spanish growth up to 3.4 percent – more than double the rest of Europe.

[Copyright EFE with Expatica]

Subject: Spanish news


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