Spanish inflation hits near two-year high

12th November 2010, Comments 0 comments

Spain's annual inflation rate hit a near two-year-high in October, data showed Friday, piling on gloom for an anaemic economic recovery that came to a halt in the third quarter.

Consumer inflation rose 2.3 percent over the 12 months to October, the highest since November 2008 when prices rose 2.4 percent and the country tipped into recession.

Inflation was accelerated by higher prices for electricity, fish and poultry, the National Statistics Institute said, revising up a previous estimate.

Inflation ran at 2.1 percent in September, it said.

Spain is already struggling with feeble economic growth, squeezed by government cut-backs aimed at reining in a huge public deficit and arresting market fears of a Greek-style debt crisis.

Economic growth was zero in the third quarter of the year, official data showed Thursday.

The expansion in gross domestic product -- total economic output -- came to a halt after advancing 0.2 percent in the second quarter and 0.1 percent in the first, when Spain emerged from one of the deepest recessions in decades.

The government has suspended dozens of road and rail projects and cut civil servants' wages as part of deep spending cuts aimed at reining in the massive public deficit.

The government aims to bring the public deficit down to 6.0 percent of GDP in 2011 and to the eurozone limit of three percent in 2013. The deficit hit 11.1 percent of GDP last year, the third highest in the eurozone after Greece and Ireland.

The Spanish economy, Europe's fifth-largest, slumped into recession in 2008 as the bubble burst on a decade-long property boom and amid the global financial meltdown.

Stripping out volatile energy and food prices, the latest data showed an underlying inflation rate of 1.1 percent over the year, unchanged from the previous month.

On a monthly basis, prices were up 0.9 percent in October after creeping up 0.1 percent in September.

© 2010 AFP

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