Spain reports sharpest price drop in five years

Spain reported Wednesday the steepest slide in consumer prices in nearly five years, a potentially worrying development as the eurozone fends off the threat of a deflationary spiral. With Spaniards cautious about spending in an economy suffering a 24-per cent unemployment rate, consumer prices dropped a sharper-than-expected 0.4 per cent in the year to July, Spain's National Statistics Institute said. The fall in prices in July was the sharpest since October 2009, the institute said, after revising its initial estimate of a 0.3-per cent decline. In the previous month, Spain's economy, the fourth-largest in the eurozone, had reported an annual inflation rate of zero. Prices were kept down by the lower cost of entertainment, electricity, tobacco, food and soft drinks, the official statistician said. When compared to June, consumer prices slumped 1.5 per cent, it said, using figures that are measured in the same way across the European Union, according to AFP.