Spain's September Inflation Slows as Growth Fades, Oil Falls

By Ben Sills

Sept. 29 (Bloomberg) -- Inflation in Spain eased for a second month in September as slower economic growth relieved pressure on prices and oil fell.

Consumer prices gained 4.6 percent from a year earlier using the European Union's calculation method after a 4.9 percent increase in August, the Madrid-based National Statistics Institute said in an e-mailed press release today. Economists expected Spanish price gains to slow to 4.7 percent according to the median of nine estimates in a Bloomberg News survey.

``The oil price has come down quite a way and that will have an impact,'' said Dominic Bryant, an economist at BNP Paribas in London. Furthermore, ``for Spain, the weakness of demand is such that it's going to squeeze margins.''

The Spanish economy is set to suffer its first recession in 15 years in the second half of 2008 as the collapse of the housing market drags down other industries, according to European Commission forecasts. European Central Bank President Jean-Claude Trichet held interest rates at a seven-year high this month saying that the ECB is still concerned about inflation.

To contact the reporter on this story: Ben Sills in Madrid at bsills@bloomberg.net.