Consumer inflation slows in August

29 August 2008

MADRID — Consumer price inflation in Spain eased in August as oil prices came off record highs recorded in July and a sharp downturn in economic activity starts to make itself felt on domestic demand.

According to a flash estimate released Thursday by the National Statistics Institute (INE), the harmonised index of consumer prices – which is used for comparative purposes within the European Union – slowed to 4.9 percent from 5.3 percent in July, the highest rate in a decade.

The INE is due to publish a full breakdown of the inflation figures on 11 September.

Oil prices hit a record USD 147.27 a barrel in July but have since retraced by about 20 percent. However, Brent crude on Thursday picked up to USD 120 barrel on fears that hurricane Gustav could damage supply sources in the Gulf of Mexico.

Spain is less energy-efficient than other countries and its inflationary differential with the rest of the euro zone has been running at around one point.

The fall in August was bigger than expected and experts say inflation may have peaked in the month.

[El Pais / Adrian Soto / Expatica]