BALEARIC inflation is starting to fall although an effort is still needed to bring regional inflation in line with the rest of Europe.
Consumers and business were hit hard in 2002 by the runaway inflation rate of 4.5 percent, however, last year, the rate of inflation slowed to 2.3 percent. Yesterday the Confederation of Balearic Business Associations (CAEB) applauded the deceleration in the rate of inflation, but warned that it can, and should, slow a little more. If we compare the rate of inflation with other regions, in particular the Balearics' main tourism markets, it is still unfavourable for business and trade, a spokesperson for CAEB said yesterday. Vicenç Tur, president of the Confederation, said that the Balearics' economy showed just how strong and resilient it can be. Despite the climate of international economic uncertainty, which pushed fuel prices up for example, we managed to reduce inflation, he said.
While the Balearic economy slowed to enjoy minimal growth last year, coupled with the strong euro and the reduction in energy costs, it helped reduce inflation. But, Tur said that more effort must be made this year to bring the Balearics in line with the rest of the Euro zone, somewhere in the region of between 1.5 and 2 percent. Nevertheless, Tur said that, at last, prices should start returning to normal. Balearic Finance Minister, Lluis Ángel Ramis de Ayreflor, said yesterday that the government's target for 2003 is to reduce inflation further, to around two percent. The rate of inflation in the Balearics has gone from being one of highest in Spain in 2002 to below the national average for 2003, he said, adding that he believes two percent to be a realistic target. The Minister said that, for the most part, the introduction of the single currency and the rounding-up of prices fuelled the runaway rate of inflation in 2002. The rounding up process hit the costs of basic necessities more than anything and of course, consumers noticed it more, he said. But over the course of this year, we will see prices start to steady, along with the rate of inflation, the Balearic Finance Minister added.
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