Madrid/Palma.—Spain has posted a hefty 3.0-per cent inflation rate for 2012 as shoppers paid the price for a sharp rise in the sales tax.
Even as Spaniards struggle with a recession that began in mid-2011, leading to a 25-per cent jobless rate, they are facing higher prices for goods and services, too, official data showed.

Prices climbed 3.0 per cent in the year to December but were flat when compared to the previous month, a report yesterday by the National Statistics Institute showed.

Over the year, prices surged in particular for food, especially vegetables and oils, and for soft drinks.
Inflation began to shoot up in September when the government lifted the top rate of sales tax to 21 per cent from 18 per cent to boost state revenues as part of a broad program to curb the public deficit. Spain's budget for 2013 foresees 39 billion euros in tax increases and spending cuts.

As part of the austerity program, Prime Minister Mariano Rajoy's government announced in November that retirement pensions would not keep up with inflation in 2013, contrary to earlier promises.

Spanish retirement pensions this year will only go up by one per cent, or two per cent for those with monthly incomes of less than 1000 euros.
And the proof has been in the results of the retail sector here in the Balearics, for example, with small to medium sized traders claiming this is shaping up to be one of the worst winters ever for takings and that the new free trading market has done little to boost their revenue.


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