Underlying inflation in Spain slowed more than economists expected in April as weaker economic growth eased pressure on prices.
Core consumer prices, which exclude energy and fresh food, rose 3.1 percent from a year earlier after gaining 3.4 percent in March, the National Statistics Institute in Madrid said today in a statement. Economists expected core prices to increase 3.2 percent, according to the median of six estimates in a Bloomberg News survey.
Spain's economic growth slowed to a 2.8 percent annual pace in the first quarter from 3.5 percent in the fourth, the Bank of Spain said April 30. The jump in credit costs stemming from the U.S. housing crash is exacerbating Spain's own property slump which is weighing on spending.
"Spain is undergoing a significant adjustment and this will happen also through prices,'' said Luigi Speranza, an economist at BNP Paribas in London. "You're getting pessimism among consumers and that affects pricing power.''
Spain's headline inflation rate, calculated by European Union standards and including food and energy, fell to 4.2 percent, matching the preliminary estimate published April 29.
Oil, Food
Deputy Finance Minister David Vegara, who forecasts a 2.3 percent expansion this year compared with the International Monetary Fund's prediction of 1.8 percent, said the price slowdown stemmed more from external factors such as the price of oil and food.
"This reduction shows the importance of external factors in recent inflation,'' Vegara said at a press conference in Brussels. "As long as international prices for energy and food stabilize in the next few months, we see inflation slowing to around 3 percent by the end of the year.''
The price of oil doubled in the past year and traded at $123.55 at 12:25 p.m. Madrid time today. Arjun N. Murti, an analyst at Goldman Sachs Group Inc., said in a May 5 report that oil will probably extend gains, reaching $150 or $200 within two years.
Core consumer prices, which exclude energy and fresh food, rose 3.1 percent from a year earlier after gaining 3.4 percent in March, the National Statistics Institute in Madrid said today in a statement. Economists expected core prices to increase 3.2 percent, according to the median of six estimates in a Bloomberg News survey.
Spain's economic growth slowed to a 2.8 percent annual pace in the first quarter from 3.5 percent in the fourth, the Bank of Spain said April 30. The jump in credit costs stemming from the U.S. housing crash is exacerbating Spain's own property slump which is weighing on spending.
"Spain is undergoing a significant adjustment and this will happen also through prices,'' said Luigi Speranza, an economist at BNP Paribas in London. "You're getting pessimism among consumers and that affects pricing power.''
Spain's headline inflation rate, calculated by European Union standards and including food and energy, fell to 4.2 percent, matching the preliminary estimate published April 29.
Oil, Food
Deputy Finance Minister David Vegara, who forecasts a 2.3 percent expansion this year compared with the International Monetary Fund's prediction of 1.8 percent, said the price slowdown stemmed more from external factors such as the price of oil and food.
"This reduction shows the importance of external factors in recent inflation,'' Vegara said at a press conference in Brussels. "As long as international prices for energy and food stabilize in the next few months, we see inflation slowing to around 3 percent by the end of the year.''
The price of oil doubled in the past year and traded at $123.55 at 12:25 p.m. Madrid time today. Arjun N. Murti, an analyst at Goldman Sachs Group Inc., said in a May 5 report that oil will probably extend gains, reaching $150 or $200 within two years.
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