Spain’s inflation rate has been confirmed at a more than four year high of 2.9 per cent in January, coming in just below a 3 per cent initial estimate but still underscoring the diverging inflationary performances of countries in the eurozone.

EU-harmonised consumer prices in the eurozone’s fourth largest economy leapt from 1.6 per cent in December, pushed up by the cost of housing and electricity. The 2.9 per cent reading is the highest since December 2012.

A climb in core inflation, which strips out volatile elements such as food and energy costs, was much more subdued however, rising to 1.1 per cent from 1 per cent in December.

Inflation has been on the march across Europe at the start of 2017 as the effect of last year’s oil price slump fades from the annual inflation basket.

Average eurozone inflation hit its highest level since 2012 at 1.8 per cent in the January, around the European Central Bank’s target of just below 2 per cent.

But senior policymakers at the ECB do not think the current leap in prices is sustainable or a reflection of growing inflationary momentum in the eurozone.

The central bank has said it is yet to see any real signs of rising wage growth, which would help maintain higher inflation rates are three years of below target prices.

Forecasts from the European Commission suggest Spain’s inflation rate will average 1.9 per cent this year before falling to 1.7 per cent in 2018. Higher consumer prices come amid a robust two-year economy recovery in the country which was forced to bailout out its banking system in 2012.

But higher inflation threatens to a brake on growth in an economy where unemployment is at 18 per cent – a seven year low – but still among the highest in the eurozone.

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