A reduction of six points in the cost of living index (IPC) in the Balearics in January has been described as positive by an Islands business confederation. The Economic department of the Confederation of Business Associations of the Balearics (CAEB), have attributed the levelling out process to the strength of the euro, the reduction in energy costs and the stagnation of the Balearic economy; and were optimistic that this stabilising trend will be maintained during the whole of this year. The management organisation believes that with this fall in pricing levels, the rate of the Balearic cost of living index (IPC) will come close to the averages that are registered in the countries of key client markets. They nevertheless, called for every effort to be made to hold down the index to bring it in line with other countries using euro currency. Meanwhile, prices in the Balearics fell by 0.6 percent in the month of January, one decimal point less than the Spanish average, situating the rate of inflation in the last 12 months at 1.8 percent. The National Institute of Statistics reported yesterday that prices last January fell significantly in clothes and shoes (-9.2 percent) and, to a lesser extent, in leisure and culture (-1.9 percent), while prices of alcoholic drinks and tobacco remained stable. The cost of living index went up in January in the other areas, especially in education (2.1 percent) and in others (jewellery, cosmetics, insurance and services), by 1.6 percent. In terms of year-on-year percentages, prices fell in the areas of communications (-1 percent), clothing and shoes (-0.9 percent), transport (-0.6 percent) and household goods (-0.1 percent) while they remained stable in leisure and culture. Conversely, pricing went up over the last 12 months in education (4.3 percent), food and non alcoholic drinks (3.9 percent) and hotels, cafés and restaurants (3.8 percent). On the Peninsula, the central government Economy minister, Rodrigo Rato, speculated yesterday that the fall in the IPC in January was a signal of hope in the future of the Spanish economy. He furthered that the behaviour of inflation in Spain, had, for the most part, been very positive. He estimated that the levelling out of inflationary trends in Spain was bringing closer parity with other European countries, giving Spain a greater chance of competing effectively.
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