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Spanish CPI plunges 1.1% in December – outright deflation

Prices have fallen by over 1% year over year in Spain: 1.1% to be precise, lower than 0.7% expected. The  country was already experiencing deflation, with -0.5%, and the impact of the oil prices makes it look worse in the initial report for December.

With euro-zone inflation standing at 0.3% in November, it could certainly fall below 0%. If in Spain, oil prices knocked off 0.6% from annual CPI and this happens for the whole euro-zone, we have -0.3%.

Spain was expected to report an annual drop of 0.7% in  consumer prices for December in the initial read. In November, CPI printed -0.4%. Spain is  experiencing outright deflation, even though the economy is growing nicely.

EUR/USD traded just under 1.2150 before the publication, still suffering the news about elections in Greece that are due in about a month.

Spain is the euro-zone’s  fourth largest  economy, but the importance of this release does not come from the size but rather from the timing and oil: due to the holidays, Spain releases its inflation data earlier than others. In addition, the falling price of oil could be reflected in this report,  giving an indication of how low euro-zone  inflation could fall to and how fast the ECB could act on QE: will they move on January 22nd?

Later we have some ECB data and then some figures from the US just before the year draws to an end.

See how to trade the US consumer confidence with EUR/USD.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.