Balearic inflation still above national average

The cost of living in the Balearics is still rising faster than the national average, but the local Minister for the Economy and Commerce, Pere Sampol said yesterday that February's 0.3 per cent rise shows that the economy is still alive. Last month's national rate of inflation was 0.3 per cent. Sampol said “there is still more demand than supply” in the Balearics, adding that a further increase in inflation indicates that there neither exists a financial crisis in the Balearics, nor that the region is facing one. “The level of consumption is still very high,” he added. However, Sampol expressed his doubts about the latest inflation figures. Anuary's figures were shrouded in controversy after central government unveiled a new system of measuring the consumer price index. Sampol said that he doubts the figures present a clear and accurate picture of the reality of the Balearic economy. Spain's inflation rate held steady at 3.1 percent year–on–year in February, well above the government's full–year target of two percent and consumer prices could head higher later in the year. Although the February figure was unchanged from the previous month, analysts noted core inflation, which strips out volatile fresh food and energy prices, had risen one decimal point from January to 3.7 percent year–on–year. They also warned a pick–up in economic growth in the second half of the year may fuel consumer price rises again. The data were closely in line with forecasts but some economists had been unable to make February estimates because the National Statistics Institute failed to make available all historical data after changing its methodology in January. “This month's figures look quite good thanks to the impact of the sales season and lower telecoms prices, but we could see a rise in March because of the withdrawal of the peseta and because the sales are over,” said Nuria Garcia, an economist at broker Ahorro Corporacion Financiera. Anecdotal evidence suggests the end of dual peseta–euro pricing, now that the national currency has stopped circulating, has prompted many retailers to round up euro prices. February's CPI rate was helped by clothing prices falling 1.1 percent in the month, on top of a 7.5 percent drop in January when the winter discounts started, and by communications prices falling 1.5 percent. That was countered by a 0.9 percent rise in hotels, bar and restaurant prices which, coming in the low season, economists said augured badly for tourism prices in Easter week and the peak summer months ahead.