Spain falls into deflation, upping pressure on ECB

MADRID (AP) — Spain's inflation rate dipped into negative territory this month, official data showed Friday, a development likely to add pressure on the European Central Bank to ease its monetary policies.

The National Statistics Institute said consumer prices in the eurozone's fourth-largest economy fell 0.2 percent in March compared with a year earlier. Falling prices, or deflation, can be a risk if they are protracted. Deflation can choke off growth as consumers and businesses delay purchases in hopes of getting better bargains down the line, and can be very difficult to get out of.

The ECB aims to keep inflation just below 2 percent, but the 18-country currency zone's rate was only 0.7 percent in February, revised downward last week from an initial estimate of 0.8 percent. Figures for March are due Monday, and the Spanish dip could contribute to a drop, analysts say.

Belgian's statistics agency on Friday also reported a lower annualized March inflation rate of 0.9 percent, compared with 1 percent a month earlier. Analyst Ralph Solveen of Germany's Commerzbank said the latest figures suggest Monday's inflation figure for the eurozone will show another drop to 0.6 percent.

The ECB's next rate-setting meeting will take place Thursday.

Related Headlines

  • Mario Draghi

    ECB chief notes risk of low inflation

    European Central Bank President Mario Draghi said Tuesday he is mindful of the danger of inflation remaining low in the 18-country eurozone and is committed to bringing it ... 

  • Europe's recovery gains speed, faces obstacles

    Official figures are expected to confirm that Europe's recovery from recession gathered pace in the first three months of the year. But the recovery is filled with worries, ... 

  • Eurozone inflation drop seals deal for ECB

    Another unexpected drop in inflation in the 18-country eurozone has made it a near certainty that the European Central Bank will act this week to support the economy. 

  • ECB enters uncharted territory with new stimulus

    The European Central Bank ventured into uncharted territory Thursday with a raft of unusual measures meant to revive the eurozone economy by getting credit flowing to ... 

Find the best rates

Find your future job here