The Spanish consumer prices fell again in August, dropping by 0.5 percent on an annual basis, preliminary figures from the national statistics institute showed yesterday, heightening concerns about deflation risk in the eurozone.
The drop follows a sharper-than-expected fall in consumer prices in July of 0.4 percent on an annual basis due to the lower cost of entertainment, electricity, tobacco and food. The fall in prices reflects weak domestic demand in Spain, still struggling with a 24.5-percent jobless rate even as the economy slowly expands after emerging gingerly in mid-2013 from a double-dip recession.
The latest inflation report is likely to be of concern to policymakers concerned about deflation, in which falling prices choke off growth.