Bloomberg News

Spain Core Inflation Unchanged as Rajoy Targets Recovery

July 12, 2013

Spain’s core inflation stabilized in June, supporting Premier Mariano Rajoy’s attempt to haul the fourth-largest economy in the euro region out of a recession this year.

Core inflation, which excludes energy and fresh-food prices, was unchanged at 2 percent last month, the National Statistics Institute in Madrid said today. That’s in line with the median of four forecasts in a Bloomberg survey.

Spain’s headline inflation rate, based on European Union calculations, was 2.2 percent, matching a June 27 preliminary estimate.

European Central Bank President Mario Draghi pledged last week to keep interest rates low for an “extended period of time” amid weak economic growth, sluggish bank lending and subdued inflation. Spain expects annual consumer-price gains to fall below 1 percent this year, making its products more competitive abroad and encouraging spending at home.

Spain is “the best country for auto investment,” Rajoy said during a visit to General Motor Co. (GM:US)’ Opel plant in Zaragoza, northern Spain on July 10. Still, Volkswagen AG (VOW)’s Seat said it is reducing working hours in the country, where unemployment has reached a record 27 percent.

The International Monetary Fund is contradicting the government’s forecast that Spain’s economy is about to recover from a slump that started in 2008. The Washington-based lender sees gross domestic product unchanged in 2014, down from an April estimate of 0.7 percent growth.

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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