Inflation in Spain marks a 14 Month high on oil

Spain's EU-harmonised consumer price index (HICP) rose a more-than-expected 1.4 percent in March year on year mainly due to energy prices, prompting expectations of an upward revision to euro-zone wide figures.

Tuesday's preliminary data marked the fifth straight monthly price increase in Spain after eight consecutive months of falls and was the highest registered rate since December 2008.

March's figure compared to forecasts of 1.1 percent by analysts polled by Reuters and to a 0.9 percent rise in Feburary.

"In the wake of the data from Germany this is less of a surprise than it would have been," said 4Cast economist Jose Garcia Zarate.

On Tuesday, German data reported inflation was a higher-than-expected +1.1 percent in March, pointing to rising price pressures in the broader euro zone.

"(Spain's figure) will probably lead to a revision of euro zone forecasts. We'll have to wait until we see the breakdown but if it follows Germany it will be linked to fuel and food prices," Zarate said.

Spain's data comes before preliminary inflation figures for the whole euro zone on Wednesday, which are expected to rise to 1.1 percent after reporting +0.9 percent in February.

A Reuters poll earlier this month showed the European Central Bank is seen leaving interest rates on hold at a record low of 1.0 percent until next year, as it struggles to boost an economy recovering from its worst post-war recession.

RETAIL FALLS EASE

Separately, Spanish retail sales fell 1.4 percent year-on-year in calendar-adjusted terms in February, the lowest fall since November 2007 and after a 2.8 percent year-on-year fall in January.

February's sales figures suggested the rate at which the economy was shrinking, hit by cash-strapped consumers and a burst property bubble, may be slowing.

"This confirms the tendency of recent months. The year-on-year rate is still falling, but the rate of decline is easing, and, in month-on-month terms, it's probably already about flat," said M&G economist Nicolas Lopez.

"So after the big fall we had last year, consumption should be about to enter slightly positive territory," he added.