Spanish economy sees inflation fall at last

The economy in June saw inflation figures fall after three consecutive months of increasesa, however economists have indicated that the recent IVA increase will cause the prices index to increase once more in the very near future.

The Consumer Prices Index (IPC) increased by 0.2 per cent in June, but the year-on-year figures fell by 0.3 per cent – a result which has cut fuel prices and led to cheaper transport, heating and electricity.

The main factors that caused an increase in the IPC last month were non-essentials such as alcohol and cigarettes, and leisure activities including package holidays.

Tobacco and drinks rose by a whole five per cent, and is the main element that has skewed the final result.

However, the recent increase in IVA is expected to see the current rate of inflation go up from 1.5 per cent to 1.9 per cent.

Unions have called for companies to attempt to absorb the IVA increase in a bid to avoid having to lay off employees due to a fall in business when their goods and services become too expensive.