By Humphrey Carter
THREE years ago, a loaf of bread cost just 60 pesetas or 36 euro cents, but now, due to record Euro inflation in Spain, a loaf of bread costs between 70 cents and one euro.

Since the single currency was introduced in 2002, prices have risen by 10.2 percent in Spain, more than in any other Euro-zone country.
The Euro zone average rate of inflation for 2002-2004 is 6.3 per cent, but Spain, along with Ireland, has seen inflation run away in double figures.
At the other end of the scale, Holland has reported just 0.5 percent post-Euro inflation while in Finland prices have risen by 2.6 per cent.
In Germany, where there has been a major issue over Euro-fueled price hikes, prices have still only risen by 4.4 percent, over half less than in Spain and below the Euro-zone average.

Here in Spain, the government has blamed fuel costs and the single currency for the high rate of inflation over the past three years. But financial experts point the finger at the government for failing to get a grip on inflation.

One of the biggest complaints about the single currency was the “rounding up” of prices which the Bank of Spain claimed would only lead to a maximum increase in prices of 1.7 percent.

Hotel and restaurant prices have risen the most by nearly 15 percent while the increases in medicine, communication and culture/entertainment costs are the only ones to remain below the ten per cent mark.

However, on the whole, we are paying an average ten percent more for everything than we did in January 2002.
Food and non-alcoholic drink prices have shot up by 13.4 percent while property rents have risen by 13.5 percent.
The European Union statistics office Eurostat reported yesterday that Spain's rate of inflation is still one of the highest in the 25-country Euro zone and was running at 3.3 percent at the end of last month.

In Finland and Swedden, for example, inflation was just 0.1 and 0.9 per cent respectively.
Only in Hungary, Lithuania and Slovakia is inflation higher than Spain but, for the first time since 1998, the Spanish rate of inflation is less than one per cent higher than the Eurozone average at 0.9 percent.

The Euro-zone average rate of inflation is 2.4 per cent and few consumers can say they have not noticed the sharp increase in prices over the past few years.

The retail and tourist sectors are also counting the costs - especially here in the Balearics.

Economy growing by 2.8%

THE Spanish economy grew by about 2.7 or 2.8 percent last year.
Official figures for fourth-quarter and full-year 2004 Gross Domestic Product have not yet been released, but Zapatero's estimate was higher than the latest government forecast and topped most economists' estimates.

Spanish consumer price inflation, measured on a national basis, was 3.2 percent in December, almost a full point higher than the euro zone rate of 2.3 percent. Economists have warned that a persistent inflation gap with Spain's euro zone partners is damaging the country's competitiveness. Spain's recent trade figures have been poor, with the trade deficit swelling by 30 percent year-on-year in the first 10 months of 2004.

The economy grew by 2.5 percent in 2003. Spain's Chambers of Commerce recently estimated Spanish GDP growth at 2.6 percent in 2004 while the Bank of Spain and the International Monetary Fund also had a 2.6 percent growth forecast for the year.


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