Spanish Inflation Drops More Than Forecast as Recession Deepens

Spanish inflation slowed faster than economists expected in January as the recession in the euro region’s fourth-largest economy deepened.

Consumer prices, based on European Union calculations, rose 2.8 percent from a year earlier, the National Statistics Institute in Madrid said today. That’s the slowest pace since August and less than the 3.1 percent increase economists predicted, according to the median of 12 estimates in a Bloomberg News Survey. Spain’s national inflation measure showed a 2.6 percent gain.

The European Commission said this week it’ll reassess Spain’s deficit targets next month after its economy entered a fifth year of recession. Prime Minister Mariano Rajoy’s government is struggling to tackle the second-largest budget shortfall in the euro region, along with Greece’s, amid unemployment at 26 percent.

Spanish inflation slowed to 2.4 percent last year from 3.1 percent in 2011, INE said this week. Inflation stripped of the impact of tax increases averaged 1.7 percent. In December, that measure was 0.9 percent, while inflation also excluding fresh food and energy stood at 0.2 percent, according to the Spanish measure. January details will be published on Feb. 15.

To contact the reporter on this story: Angeline Benoit in Madrid at abenoit4@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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