MADRID - Spanish inflation eased in July after rising for two months, official data showed Tuesday, as a job-destroying recession has led to a collapse in demand. Consumer prices rose 1.9 per cent over the year to July after a 2.2pc increase in June and a 1.8 per cent rise in May, final figures from the National Statistics Institute showed. Annual inflation was 1.5 per cent in April. The inflation slowdown was due mainly to lower increases in the price of medicine, electricity and fuel, the institute said in a statement.

This was offset by a higher increases in the price of food, especially fruit, and tobacco.

Spain’s inflation rate leapt when Prime Minister Mariano Rajoy’s conservative-leaning government raised the sales tax in September 2012 year so as to rein in the public deficit, causing the annual rate to soar to 3.5 per cent that month.

Spain, the eurozone’s fourth-biggest economy, has been struggling in recession since 2011 as the government curbs spending and raises taxes.

The unemployment rate hit 26.26 per cent in the second quarter of this year, slightly below the record 27.16 per cent posted in the first quarter.

Consumer demand has retreated in the face of these headwinds. Retail sales in Spain fell 5.1 per cent in June—the 36th straight monthly decline.