Bloomberg News

Spanish Inflation Accelerates for First Time in Five Months

September 29, 2011

(Updates with retail sales in fifth paragraph, comment from finance minister in sixth.)

Sept. 29 (Bloomberg) -- Spanish inflation accelerated in September for the first time since April on higher oil prices even as consumers suffering from the highest unemployment rate in Europe reined in spending.

Consumer prices, based on European Union calculations, rose 3 percent from a year earlier, compared with a 2.7 percent rate in August, the National Statistics Institute, or INE, said today. Inflation was 3.1 percent according to the Spanish measure of prices, the Madrid-based institute said.

Spain’s inflation rate remains above the euro-era average, even as its economy is recovering more slowly than Europe. Euro- region inflation was 2.5 percent in August, unchanged from July. The Bank of Spain’s monthly bulletin published yesterday said third-quarter data show “weakness of activity in general.”

Spain is more sensitive to changes in the cost of oil than other euro-area countries and inflation should fall below the regional average early next year, Bank of Spain Governor Miguel Angel Fernandez Ordonez said on May 23. The price of crude oil traded at $81.65 today, 28 percent below its April 29 one-year high.

Retail sales declined for the 14th month in August, the INE said in a separate statement today, as the 21 percent unemployment rate undermines consumer demand.

Finance Minister Elena Salgado today said the slowdown in Spanish economic growth continued in the third quarter though expansion will “continue in the third and fourth quarters, and of course much more so next year.”

--Editors: Jennifer M. Freedman, Jeffrey Donovan

To contact the reporters on this story: Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net; Angeline Benoit in Madrid at abenoit4@bloomberg.net

To contact the editor responsible for this story: Matthew Brockett at mbrockett1@bloomberg.net


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