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Spanish inflation eases in January

Date: Tuesday 31 Jan 2012

Spanish inflation eases in January

Spain's consumer price index (CPI) fell to a year-on-year increase of 2.0% in January, according to the preliminary data released by the country's national statistics office (INE).

The December reading was 2.4% and the November reading was 2.9%. Prices have been slowing down since the 3.8% high reached in April of 2011.

"This was mainly a result of the stability of electricity and tobacco prices, as compared with the increase of the previous year," reports INE on its press release.

Similar, harmonised CPI fell four percentage points to 2.0% in the annual change.

“We will have to wait two weeks for the complete and final CPI data to be released so that we may look at all price components,” said analysts at Digital Look.

“In any case, the fact that prices are falling is good news. Lack of demand and cost control (salaries and energy prices) lead us to believe that general inflation will remain close to the 2.0% level over the coming months. However, we will have to be alert to new reforms and especially potential sales tax hikes,” they said.

In any case, the analysts say that low inflation below the Eurozone average (2.7% in December) will help to improve Spain's competitiveness.

F.M.

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