topics
tools
Expatica countries
Index Last Var.(%)
BEL 20 2119.44 0.28
DAX 6339.94 0.38
IBEX 30 6543 0.13
CAC 40 3047.94 0.32
FTSE 100 5351.53 0.03
AEX 292.76 0.23
DJIA 12454.83 -0.60
Nasdaq 2837.53 -0.07
FTSE MIB 13154.8 0.36
TSX Composite 11576.47 0.09
ASX 4081.2 -0.61
Hang seng 18713.41 0.25
Straits Times 2772.75 -0.24
ISEQ 20 500.94 1.55
You are here: Home News Spanish News July inflation in Spain soars to highest since 1992

Spanish News

archive
Enlarge font Decrease font Text size


14/08/2008July inflation in Spain soars to highest since 1992

The inflation hits 5.3 percent and is the highest rate since December 1992.

14 August 2008

MADRID - Spanish consumer prices rose at their fastest pace in 16 years in the 12 months to July, but government officials said inflation has now probably peaked and price increases should start to ease before the end of the year

At 5.3 percent, the inflation rate matches the level that was seen at the height of the last recession in December 1992, according to figures published Wednesday by the National Statistics Institute (INE).

Surging fuel and food prices pushed year-on-year inflation in July.

However, inflation contracted from June by three-tenths of a percentage point, helped by sharp falls in clothing prices as summer sales kicked in.

With oil prices now receding, the government expects inflation to slow over the coming months and to end the year below four percent.

Some analysts saw the rise in underlying inflation as a clear sign that production costs are now feeding into consumer prices and could thereby push inflation even higher.

Underlying inflation, excluding energy and fresh food, rose 3.5 percent from a year earlier, up from 3.3 percent in June.

"Spain, one of the euro zone's biggest underperformers on growth, is proving unable to curb inflation at source," said José García Zárate at the 4Cast Consultancy in London.

"The slowdown is not offsetting inflationary forces."

The government said Wednesday that if the price of oil does not rise from current levels, it sees inflation receding from August onward and ending this year at below 4 percent.

The Economy Ministry said that 0.3 percent of the inflation recorded in July was due to global oil prices, which had risen by 88 percent since the beginning of the year. Global oil prices last month hit a peak of over $147 per barrel, but have retreated since then.

But Nuria Bustamante, an analyst at Caja Madrid, saw inflation ending 2008 at above 4 percent.

"We expect inflation to hit its maximum in August of 5.4 percent, falling to around 4.3 or 4.4 percent in the last three months [of the year]," she said.

The opposition Popular Party (PP) expressed concern at the latest figures. The PP's spokesman for the economy, Cristóbal Montoro, described present inflation levels as "a direct threat to the welfare of Spaniards".

Montoro reiterated calls by the PP that the government should take tougher measures to tackle Spain's serious economic problems. He blamed Prime Minister José Luis Rodríguez Zapatero for worsening the situation by denying, until recently, that the country was suffering from an economic crisis.

On Wednesday, Zapatero met with ministers to discuss the economic situation.

Spain's Chamber of Commerce said that after inflation peaks in August, the consumer price index will start to retreat slowly in 2008 and at a faster pace in 2009. The Chamber said the downturn, which has dampened consumption, will force inflation to fall, as will falling oil prices.

[El Pais / Expatica]


0 reactions to this article

Be the first person to add a comment

General rating: Not rated yet

Rate article:    Add my rating



0 reactions to this article

Be the first person to add a comment
Discussion Forums

Technology in Spain

Sat phones/internet links

English in Spain

What is the best travel insurance cover to Spain?

American in Spain

U.S. citizens, plan to vote in 2012? Did you know...

Relocation to Spain

thinking of moving to madrid

Jobs in Spain

Job Agencies or how to find work.

participate in the forums

Inside Expatica
Editor's Guide: Getting Started in Spain

Editor's Guide: Getting Started in Spain

Expatica's Getting Started section will provide practical information on how you can open a bank account, exchange your driving licence, improve your Spanish, and more.

Groups and Clubs in Madrid

Groups and Clubs in Madrid

Here's a guide to an extensive list of groups and clubs in Madrid for expats, from sports groups to social and family gatherings.

Groups and Clubs around Spain

Groups and Clubs around Spain

A brief introduction to our Tax section for Spain, from help with inheritance tax to accounting advice.

Groups and Clubs in Barcelona

Groups and Clubs in Barcelona

Here's a short introduction to our Banking section for those living in Spain, from what to ask the experts to opening a Spanish bank account.