The Balearic economy may well be slowing down, but the rate of inflation is not. Last month, the rate of inflation dropped in ten autonomous communities across Spain, but the Balearics suffered the highest increase in the cost of living. January's consumer price index in the Balearics showed a rise of 0.5 per cent, pushing the rate of inflation for the past 12 months to 3.2 per cent. The price of clothes and footwear did fall by 2.3 per cent last month along with tobacco and alcohol, 0.1 per cent and culture and entertainment which dropped by 1.3 per cent. But the slight down turn was off set by increases in the cost of transport, 1.5 per cent, medicine 1.2 per cent, communications 1.1 per cent, hotels, cafes and restaurants 0.5 per cent and “others” 2.5 per cent. The rise in the cost of living in the Balearics bucks the national trend. Spain's Finance Minister, Rodrigo Rato, said yesterday that the slight fall in the consumer price index on the mainland shows that the introduction of the euro, at the start of the year, and the price “rounding up” phenomenon has had little effect. He also said that the rate of inflation will drop again in March. Leading consumer organisations however said yesterday that the inflation figures “do not reflect the reality of prices on the high streets.” Director of the Spanish Consumer Union, Enrique García, said that methods of calculating the IPC index have not been altered to allow for the effects of the euro, which has forced prices up. Consumer experts estimate that the cost of living on the mainland has actually risen by between 0.5 and 0.9 per cent and higher in the Balearics. The Organisation of Consumers and Users (OCU) accused the government of trying to hide the real impact of the introduction of euro notes and coins on January 1. “It's a joke. It looks like magic had a hand in the figures because they really are incredible,” Jose Maria Mugica, OCU's director general said. Mugica said according to a basket of 750 products measured by OCU, private sector prices had risen 1.2 percent in January from December while public sector prices had risen 3.0 per cent.

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