Spanish consumer prices dropped for the fifth month running in November, adding pressure on stubbornly low inflation in the eurozone as a whole.

Expectations are growing that the European Central Bank will shortly step up attempts to tackle the threat of deflation and weak growth in the eurozone, including through sovereign bond purchases early next year.

In Spain, national consumer prices fell 0.4 per cent year-on-year in November, data from the National Statistic Institute (INE) showed yesterday, the sharpest fall since August.

Dropping oil prices are largely behind the run of declines, though core inflation, which strips out volatile elements such as energy and food, also fell in October for the second month in a row. Spanish officials, as well as analysts, have largely played down the danger of deflation, which does not at this stage appear to be derailing spending and Spain’s economic recovery.

Dropping oil prices are largely behind the run of declines

Spain emerged from a deep recession last year to become one of the fastest growing economies in the eurozone, and its output expanded for the fifth quarter in a row in the July-September period, separate data from INE confirmed yesterday. A rebound in domestic demand has partly helped the country weather an economic slowdown among major trade partners in the eurozone, which has dampened Spain’s export growth this year.

Spanish gross domestic product grew 0.5 per cent quarter-on-quarter in the third quarter, the data showed, in line with preliminary readings.

Quarterly GDP growth in the April-June quarter was revised downwards to 0.5 per cent, INE said, from an earlier reading of 0.6 per cent.

But the country may not stay immune to the broader euro zone slowdown for long, and some economists believe the pace of Spain’s recovery is weakening.