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A tentative sign that inflation may be pinching the Spanish consumer.

A measure of retail sales in Europe’s fourth largest economy fell for the first time since 2014 at the start of the year – its first contraction after 28 consecutive months of growth.

Month on month retail sales fell 0.1 per cent in January after a 0.9 per cent expansion at the end of 2016 and were up just 0.1 per cent on a year-on-year measure. Economists had expected sales to be 2.5 per cent highest in January compared to the same month in 2016.

The surprise dip comes as Spain’s inflation rate has surged above 3 per cent in 2017 – a far higher acceleration in prices than seen in the eurozone’s other major economies in recent months.

Higher inflation threatens to choke off Spain’s impressive economic recovery following a deep recession in 2012/2013. The economy expanded at a 0.7 per cent quarterly pace at the end of the year, up 3 per cent on a year on year measure.

Chart via Bloomberg

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