MADRID (MarketWatch) -- In an environment where markets are poring over every piece of data that comes out of the euro-zone's struggling southern peers, a negative turn in core inflation for Spain was not about to go unnoticed.
Final April consumer price inflation data released on Friday showed that for the first time in the series of the data, the core inflation rate turned negative to - 0.1% on an annual basis from 0.2% in March.
"Spain joins therefore Slovenia, Portugal and Ireland in the number of countries where core prices are falling compared to the previous year," said Luigi Speranza, an economist at BNP Paribas.
He said seasonal factors probably exacerbated that core trend, but they also see this as more than just a temporary dip, in line with their long-held view.
"Low inflation implies low nominal growth, which is an additional problem for fiscal trends. The government announcing just this week further tightening measures, such as a 5% cut in public sector pay which has triggered a national strike set for June 2 by unions.
http://www.marketwatch.com/story/negative-core-inflation-in-spain-spooks-stocks-2010-05-14
