Spain: Inflation inched up in October
November 12, 2010
In October, consumer prices increased 0.9% over the previous month, which came in well above the 0.1% price rise recorded in September. Due to the price spike, annual inflation rose from 2.1% in September to 2.3%, which was a notch above the 2.2% preliminary estimate released by the Statistical Institute on 29 October and in fact marked the highest value since December 2008. Inflation continues to increase, as businesses try to pass on the two percentage point VAT increase implemented in July this year, despite an unemployment rate of 20% and declining consumption. The monthly price rise was mainly driven by higher prices for clothing and footwear (+9.8% month-on-month). In contrast, prices for leisure and recreation dropped 0.8% over the previous month. The core inflation index, which does not include prices for unprocessed food and energy, rose 0.9% over the previous month. However, annual core inflation remained unchanged at September's 1.1% rise. More recent data point to a rise in inflationary pressures. According to a preliminary estimate released by INE on -- November, annual inflation increased to 2.-% in November, which is the highest level in nearly two years.