Spain underlying inflation grew in July

 

Spain's rate of underlying inflation increased for a second month in July, even as the economy slumped further into a recession that has pushed the unemployment rate to almost 25%.

Core consumer inflation, which excludes energy and fresh food, accelerated to 1.4% from 1.3% in June, according to a report released by the National Institute of Statistics (INE) earlier today. with prices falling 0.7% from June.

Economists forecast an annual gain of 1.3%, the avergae of 4 estimates in a survey undertaken by Bloomberg.

Spain's recession deepened over Q2 as the sovereign-debt crisis worsened, pushing the unemployment rate to 24.8% in June. Adding to pressure on consumers, PM Mariano Rajoy is implementing more than €100 billion of budget cuts, including an increase in value-added tax.

Amid weak demand, some retailers may absorb the sales-tax increase rather than passing it on to customers, Deputy Economy Minister Fernando Jimenez Latorre said on July 13. Inditex, the owner of fashion brand Zara, won't raise prices to reflect the increase in the main rate to 21% from 18%, the Arteixo, Spain-based company has said.