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Spanish Inflation Unchanged as Deficit Fight Deepens Recession

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Jan. 2 (Bloomberg) -- Spanish inflation remained unchanged in December as the recession in the euro region’s fourth-largest economy deepened.

Consumer prices, based on European Union calculations, rose 3 percent from a year earlier, the National Statistics Institute in Madrid said today. That matched the median of 17 estimates in a Bloomberg News survey. Spain’s national inflation measure showed a 2.9 percent rise.

The Spanish economy probably contracted for a sixth straight quarter at the end of last year as Prime Minister Mariano Rajoy implemented austerity measures to reduce the euro-area’s second largest budget deficit. The government expects to miss its target set by the European Union again this year.

The Brussels-based European Commission suspended its budget-cut prescriptions for Spain in November after the 17-nation euro area fell into a recession. The European Central Bank lowered its economic forecasts last month, predicting a contraction of 0.3 percent this year.

Several tax increases since Rajoy assumed power a year ago have contributed to prices rising even as the second recession since 2008 left over a quarter of the workforce jobless. Stripping out their impact, inflation was 0.9 percent in November, according to the Spanish statistics institute, and 0.3 percent if fresh food and energy were also excluded. The equivalent measure for December will be published on Jan. 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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