Bloomberg News

Spanish Inflation Slows for Second Month as Economy Falters

December 30, 2011

Dec. 30 (Bloomberg) -- Spanish inflation eased for a second month in December as the euro area’s fourth-largest economy showed signs of contraction in the final quarter.

Consumer prices, based on European Union calculations, rose 2.3 percent from a year earlier, slowing from 2.9 percent in November, the National Statistics Institute in Madrid said today, a day after it reported retail sales fell 7.2 percent in November from a year earlier, the most since June.

The Bank of Spain yesterday confirmed earlier forecasts that the economy is contracting in the last quarter as tourism and exports, the drivers of its fragile recovery in the first half, weakened while household spending and investment worsened.

Prime Minister Mariano Rajoy, whose People’s Party beat the Socialists in the Nov. 20 election, will announce his first spending cuts today as he seeks to tackle the euro area’s third- largest budget deficit and the European Union’s highest jobless rate.

--Editors: Eddie Buckle, Patrick G. Henry

To contact the reporter on this story: Angeline Benoit in Madrid at abenoit4@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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