Spanish consumer inflation fell to its lowest since December in July, hit by weak domestic demand and the fading of impact from a value-added tax hike a year earlier.
High energy prices still drove national consumer prices 3.1 per cent up year-on-year, in line with the flash reading and analysts' forecasts, but that was down from 3.2 per cent a month earlier, National Statistics Institute data showed.
Consumer prices rose 3 per cent year-on-year in July on an EU-harmonised basis, equal to that recorded in June.
Spain's Socialists increased VAT to 18 per cent from 16 per cent in July last year as part of saving measures to assure nervous investors it had control of the national finances.
Despite an economy struggling with low growth, high unemployment and budget cutbacks, Spanish consumer prices have tended to be more volatile and above the euro zone average due to high imports of energy such as crude and natural gas.
The euro zone is expected to report inflation of 2.5 per cent year on year in July on Aug 17th.
Core inflation, which strips out volatile food and energy prices, was 1.6 per cent, down from 1.7 per cent in June.
Spain's economy has been in recession or stagnant for around three years after the global financial crisis cut off consumer lending, bursting a decade-long property bubble and paralysing domestic demand.
Reuters
