MADRID, Aug 13 – Spanish consumer prices fell 1.4 percent in July from 12 months earlier in the fifth consecutive monthly decline, official data said Wednesday.
The figure released by national statistics body INE confirmed its provisional estimate published at the end of July, raising further concerns that the country\’s worst recession in decades will lead to deflation.
In March, Spain posted its first 12-month drop in prices since INE began tracking inflation in 1961, with a 0.1-percent decline that month. Prices dropped another 0.2 percent in April, 0.9 percent in May and 1.0 percent in June.
Spanish inflation, which has generally been higher than the eurozone average over the past decade, is now slowing more sharply than the rest of the region as its economy slumps.
Deflation, characterised by a prolonged period of falling prices, can be harmful to the economy as it often leads consumers and companies to hold back on spending as they wait for even better deals.
Spain entered into its first recession in 15 years at the end of 2008 and unemployment has soared as the global credit crunch worsened a correction that was already underway in its once booming housing sector.