OECD calls on Spain to cut inflation gap
The Organization for Economic Cooperation and Development (OECD) indicates in its latest report that
Spain must cut its inflation differential with the rest of the Euro zone in order to avoid a loss of competitiveness.
Spain saw an inflation rate of 3.3% in February against an average inflation rate of 2.1% in the Euro zone.
After narrowing to around 0.5 percentage points in early 2004, the inflation gap with the Euro zone is now widening again, the OECD noted.
OECD also indicated that
Spain's higher oil dependency will surge inflation around 3% this year. Thus, the inflation differential with the Euro zone will remain at around 1 percentage point.
The OECD report advises
Spain to change several policies and cool its housing market in order to reduce the inflation gap and maintain the macro-economic stability.