The high streets are quiet and there is little activity in Palma's banks, not only is it February and most households are still trying to recuperate the Christmas, New Year and Three Kings expenditures, but the cost of living went up by 0.2 per cent in January. But while the IPC, consumer price index rise was 0.2 per cent, the costs of cosmetics and jewellery, for example increased by 1.9 per cent, the sharpest consumer price rise in the Balearics. But the cost of entertainment also posted a rise. Hotel bar and restaurant prices rose by 1.3 per cent and the cost of education by 0.3 per cent. Culture, transport, tobacco and alcohol, however fell in price, albeit marginally. Looking at the IPC index over the past year, there has been a 3.8 per cent increase in prices in the Balearics, just above the national average with the rate of inflation last year balancing out at around 5'9 per cent. The only consumer sector to have shown a fall in prices over the past 12 months has been the communications industry, which has seen prices fall by 2.7 per cent as the market becomes increasingly competitive. With households in the Balearics finding it hardest in Spain to reach the end of the month, living in a region which now has the fourth highest rate of inflation in Spain will do little for consumer confidence. Spain's deputy Prime Minister, Mariano Rajoy, yesterday said that the national rate of inflation of 3.7 per cent will be reduced this year, but admitted that the Spanish economy will not grow at such a healthy rate as last year, although the rate of growth will still sit slightly above the European Union average. But in the Balearics, reducing the cost of living is becoming increasingly difficult because of the extra transport costs for shipping goods here which are added on. The cost of living in an “isolated” region is proving to cost the Balearics dear and the Baleraric government is battling to try and bring transport costs, both commercial and merchant, down. Fuel costs are somne of the highest in Spain and that has a negative repercussion on the price of retail goods.

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