Spain’s April PPI falls to 7-year low, oil prices remain key driver

Spain April producer price index fell to record level since the worst financial crisis of 2008. Producer prices fell continually for 22ns straight month to touch a 7-year low level, buoyed by depressing oil prices.

The PPI index fell 6.1 pct y/y in April. They had fallen 5.6 pct in March, but April marks the sharpest pace of contraction since July 2009, in the depths of the financial crisis.

However, fall in producer prices m/m was lesser than that on year. Prices fell 0.1 pct, after rising 0.6 pct in March on year.

Meanwhile, world consumer and producer prices have been witnessing fall over the past 18 months, largely attributing to sliding crude oil prices. Continuous effects of deflation can lead to erosion of corporate earnings. This will in turn lead to lay-off of workers and controlled investment, leading to sluggish economic growth.