Spanish inflation slowed slightly in May from a month earlier as energy prices rose at a cooler pace, and analysts said price growth may have peaked, helping efforts to make its economy more competitive.
Headline inflation fell to 3.5 per cent year-on-year according to the national measure, from 3.8 per cent a month earlier, while the EU-harmonised figure stood at 3.4 per cent, National Statistics Institute data showed.
That was in line with a flash estimate at the start of this month. The breakdown showed that housing and energy prices rose almost 8 per cent in May from a year earlier, slower growth than in April but still high.
Food prices rose 2.5 per cent from a year earlier, for their highest rate of growth since November 2008 and analysts said overall high price growth will feed into expectations for a euro zone rate hike in July.
Spain's consumer price index, or CPI, rose 3.4 per cent in May in EU-harmonised terms, or 3.5 per cent without adjustment, from the same month last year.
The CPI was flat in May compared with April, or down 0.1 per cent in EU-harmonised terms.
Core inflation - which strips out volatile food and energy prices - was 2.1 per cent, the same as in April.
Spain's government raised value-added tax rates to 18 per cent from 16 per cent last July as part of a wide-sweeping range of measures aimed at deflating one of the euro zone's largest public deficits.
Higher inflation is dampening spending power, which in turn restricts economic growth, throwing doubt on the government's growth outlook of 1.3 per cent this year and ambitious deficit cutting target.
Reuters
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