Spanish prices edge up in February
Bank of Spain governor forecast a Spanish inflation rate of just 0.4 or 0.5 percent by end of 2014.
MADRID (AFP) - Spanish consumer prices crept barely higher in February, official data showed Wednesday, as deflationary concerns dogged sluggish eurozone economies.
Capped by falling fuel costs, Spanish consumer prices climbed at an annual rate of just 0.1 percent in February after edging up by 0.3 percent in January, the National Statistics Institute reported.
Inflation has been kept in check by weak demand in Spain, which struggled gingerly out of a two-year economic downturn in the second half of 2013 and still has an unemployment rate above 26 percent.
Spain s inflation rate, calculated in the same way across the European Union, was at its lowest level since October 2013 when consumer prices were flat.
It remains well below the European Central Bank s target for the eurozone of about 2.0 percent. Eurozone inflation was 0.8 percent in February.
Bank of Spain governor Luis de Linde forecast a Spanish inflation rate of just 0.4 or 0.5 percent by the end of 2014.
"It is important it should be low to maintain competitiveness," Linde told an economic forum in Madrid.
But low inflation in Europe complicated Spain s recovery, Linde added. "We would not be against a slight increase in inflation in the eurozone," he said.
While consumers may welcome low inflation, a broad, sustained decline in prices can lead shoppers and businesses to postpone purchases as they wait for prices to tumble even further.
At the same time, it becomes harder to finance existing debts.
The result can push an economy into a downward spiral.
IMF chief Christine Lagarde urged the eurozone this month to fight persistently low inflation, warning that it presents a looming threat to economic recovery in the region.
"We see the risk of prolonged low inflation way below targets -- targets being as you know just below two percent -- looming," the IMF managing director told an econonic conference in Bilbao, northern Spain.
This "could derail the recovery", she warned, adding that the Fund believed the European Central Bank still had "room to manoeuvre" to raise inflation closer to its target.
