Consumer prices declined for a full calendar year for the first time in modern history in Spain in 2014, according to data released by the national statistics institute INE on Thursday.wpid-Money.jpg

Prices in December 2014 were 1 per cent lower than prices in December 2013, reported INE, which noted that the decline increased dramatically towards the end of the year. In November, the rate of inflation had only stood at -0.4 per cent.

The data shows that prices in Spain declined for six months in a row in 2014.

Although there was a year-on-year drop in prices before in Spain – from July 2008 to July 2009 – prices ultimately rose again in 2009 leaving figures for that year in the positive. The December year-on-year figure of a 1-per-cent decline is automatically the same as the 2014 annual figure.

Other statistics agencies used a figure for harmonized data, but those also showed a decline, this time of 1.1 per cent.

INE said the decline was largely tied to declining petroleum prices. However, decreases in transportation and food prices also contributed.

The Spanish government has argued that Spain is not facing deflation, which would mean a round of falling prices. December inflation data is key in the Spanish economy, as it is used to set pensions.


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