LOWER FOOD AND OIL PRICES DRAG INFLATION DOWN

MADRID AND PALMA
SPAIN'S inflation eased in September to a five-month low on falling energy and food prices and as a weakening economy hit confidence on the high street.

Inflation fell to a lower-than-expected 4.5 percent in September, down from 4.9 percent in August, the National Statistics Institute said yesterday.
On a month-on-month basis, inflation was unchanged, after a 0.2 percent fall during August. “The drop in oil prices has helped to bring down the headline figure, and we're likely to see this effect continue over the next few months,” said 4Cast economist Jose Garcia Zarate.

A slowdown in food price rises from last year, especially for milk, bread and chicken, also helped ease inflationary pressures in September, the government figures showed.

The Spanish data preceded euro zone data today expected to show inflation in the 15-member currency block fell sharply to 3.6 percent in September thanks to a huge retreat in oil prices.