Spain Inflation Unexpectedly Slows In August

Spain inflation slowed unexpectedly in August and retail sales fell for the first time in four months in July on weak non-food product turnover, separate data from the statistical office INE showed Tuesday.

Consumer price inflation eased to 10.4 percent in August from 10.8 percent in July. The rate was forecast to rise marginally to 10.9 percent. July’s 10.8 percent increase in prices was the strongest since September 1984.

Meanwhile, underlying inflation that excludes non-processed food and energy products rose to 6.4 percent from 6.1 percent a month ago. This was the strongest since January 1993.

The rise in core inflation suggests that a downward inflation trend will be at best very gradual, ING Economist Wouter Thierie said.

The slowdown in overall inflation was driven by the development in fuel prices. On the other hand, prices of electricity, food, restaurants and package holidays registered strong growth.

On a monthly basis, the consumer price index edged up 0.1 percent, while economists’ had forecast prices to fall again by 0.3 percent.

EU harmonized inflation slowed to 10.3 percent in August, as expected, from 10.7 percent in July. Monthly, the harmonized index of consumer prices was up 0.1 percent, reversing July’s 0.6 percent fall.

Retail trade slid by adjusted 0.5 percent in July from the last year, in contrast to the 0.7 percent gain a month ago, the statistical office said in a separate communique.

On an unadjusted basis, retail sales declined 3.3 percent annually after rising 0.7 percent in June.

Food turnover decreased 1.0 percent, while non-food sales logged a sharp 4.0 percent fall.

Month-on-month, retail sales logged its third consecutive fall in July, data showed. Sales decreased 0.7 percent, following a 0.3 percent drop in June.

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