Spanish consumer prices fell at their fastest rate in seven months in September, preliminary data showed on Tuesday, dragged down by low electricity and oil costs, while retail sales continued to rise on the back of growing demand. Flash EU-harmonised consumer prices fell by 1.2 percent year-on-year in September, the National Statistics Institute (INE) showed, well below a consensus forecast of a 0.6 percent fall and previous drop of 0.5 percent.
National prices also fell more than a month earlier, slipping 0.9 percent in September on an annual basis, down from a 0.4 percent slip in August. Spain's data comes ahead of more closely watched price figures from Germany later on Tuesday and the euro zone as a whole on Wednesday, where prices are expected to remain unchanged from a year earlier.
The European Central Bank is ploughing a trillion euros into the euro zone financial system as part of a quantitative easing programme aimed at pushing inflation up towards its target of below but close to 2 percent. Spanish consumer prices have held below 2 percent for 26 straight months, INE figures show. While consumer prices remained in negative territory, retail sales rose for the 13th month in a row as growing domestic demand, after years in the doldrums, continued to boost economic output.
Retail sales rose 3.1 percent from a year earlier in August after a revised 4 percent increase a month earlier, other data from INE showed. Spain's economy is expected to grow at least as fast in the third quarter as the second quarter's 3.1 percent year-on-year expansion, and by 3.3 percent this year, one of the strongest rates in the euro zone.