Falled below 2% of ECB target
Spanish inflation slowed below the European Central Bank's target of 2%, a small victory for Frankfurt officials struggling to tame cost increases in the wider eurozone.
In more detail, consumer prices rose 1.6 percent in June from a year earlier, up from 2.9 percent the previous month, as increases in energy and food bills continued to ease, according to the country's statistics office. This is the weakest rate of inflation in more than two years.
However, the data from the region's fourth-largest economy did little to reassure ECB officials, despite their notable improvement. Policymakers are still mainly watching structural inflation in the Eurozone, which is likely to have picked up again. “The evolution of structural inflation I think is very important in the current circumstances,” said ECB Vice President Luis de Guidos. “Structural inflation will persist longer than we think.”
Spain's former finance minister De Guido said another ECB rate hike in July was a “fait accompli”, while there was an open question about what should be done at the next meeting in September. This is the focus of discussion among officials at present. Spanish Economy Minister Nadia Calvino said last week that Spain may not need more rate hikes, although she acknowledged that the ECB is “looking at Europe as a whole”.
Despite the slowdown in growth prices in Spain, Prime Minister Pedro Sanchez, who is trailing in the polls ahead of a July 23 snap election, on Tuesday extended an anti-inflation package of 3.8 billion euros in tax cuts and subsidies.
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