Judging from Spain, ECB president Mario Draghi is deep in the hole on his target of “close to but not exceeding 2% inflation”.

In January, Spain’s CPI was -0.3%. This month, Spanish CPI went further into deflationary territory with a reading of -0.8% according to Spain’s National Statistics Institute.

Via translation from La Vanguardia: CPI Delves Further Into Negative Led by Lower Fuel and Food Prices.

The Consumer Price Index (CPI) has ventured further into negative territory in February when registering an inter-annual variation of -0.8%, up from -0.3% in January. In monthly terms, the index recorded a rate of -0.3%, reported Friday the National Statistics Institute (INE).

This variation is explained by the decline in prices of fuel and food. Professor of Economics at the business school Esade Josep Comajuncosa explained to Efe that the decline in CPI is somewhat higher than what could be expected only by the fall in fuel prices, as well as being “in line some moderation of economic activity across the euro zone.”

Deflation Absurdity

The absurdity of this ridiculous worry about falling prices is the Spanish economy is one of the best performing in the Eurozone.

Spain did much worse when inflation was higher as evidenced by a huge property bubble boom and bust.

Here’s the problem: Central bank fools measure consumer prices instead of the asset bubble boom-bust cycles that result from their own anti-deflation actions.

Mike “Mish” Shedlock