Spanish consumer prices fell 0.8 percent in May from the same time last year in the third monthly decline in a row, raising fears of possible deflation – a prolonged period of falling prices.

In March, Spain posted its first 12-month drop in prices since the national statistics institute INE began tracking inflation in 1961, with a 0.1-percent decline that month. Prices dropped another 0.2 percent in April.

The government however has dismissed the risk of deflation, characterised by a prolonged period of falling prices that often leads consumers and companies to hold back on spending as they wait for even better deals.

Spain entered into its first recession in 15 years at the end of 2008 and unemployment has soared as the global credit crunch worsened a correction which was already underway in its once booming housing sector. (Via Expatica)