INE release Inflation stats

 

The National Institute of Statistics (INE) today released dat showing how the underlying inflation rate remained at a two-year peak last month with rising costs outgrowing consumer demand.

The core inflation rate - which excludes certain commodities such as energy and food products - increased 2.1% on last year, to match April's two-year high, with overall headline inflation coming in at 3.4%, as expected in the preliminary forecast last month.

Last week the President of the ECB, Jean-Claude Trichet, suggested that the Frankfurt-based bank could increase their 1.25% benchmark lending rate in July as price pressures remain with the euro-area inflation rate have remained above the ECB's 2% ceiling since December. The ECB managed to cut borrowing costs in April for the first time in almost three years.

Inflation in Spain has grown beyond the EU average due to the energy-intensive economy and the reliance on importing fuel on importing fuel, the Bank of Spain Governor warned last month. Both Governor Fernandez Ordonez and Deputy Finance Minister Jose Manuel Campa expect the country's inflation rate will fall below the EU average next year, with positive signs being seen as early as next month.