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PREVIEW-Spain inflation seen flat in Feb vs Jan

Published 02/24/2009, 06:20 AM
Updated 02/24/2009, 06:24 AM
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* What: Spain Feb flash EU-harmonised inflation, INE

* When: 0800 GMT, Feb 27

* Consensus: 0.8 percent Feb vs 0.8 percent Jan

By Manuel Maria Ruiz

MADRID, Feb 24 (Reuters) - Spain's annual EU-harmonised inflation is expected to remain unchanged in February at 0.8 percent, its lowest rate on record, as falling commodity prices and the economic slowdown dampen price gains.

In a poll conducted by Reuters of 10 analysts, estimates ranged from 0.5 percent to 0.9 percent for the preliminary figure due on Friday. The final breakdown will be reported March 12.

Some economists said February's inflation could be lower than posted in January as prices for non-energy related industrial products and some processed foods continued to fall.

Despite expectations of a prolonged recession in Spain, the government and many analysts believe the country will not fall into deflation.

"Spanish inflation will continue to fall to very low levels until the summer, but will rebound by the end of the year. We're not expecting negative figures," said Fortis Bank economist Estefania Ponte.

Analysts noted the base effect for oil prices, which rose to record highs in July last year, and the worsening global recession would lead to a new decline in Spanish headline inflation after February.

"In the spring we'll see another reduction in prices due to base effects, especially in energy prices, and due to weakening growth," Citigroup analyst Jose Luis Martinez said.

Spanish price growth has fallen every month since July, when the country registered record growth of 5.3 percent, the highest rate since the series began in 1997.

(Reporting by Manolo Ruiz; Writing by Paul Day; Editing by Jason Neely)

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