Spain's annual inflation rate falls to 2.2% in March, slowest in five months

(Reuters) - Spain's annual inflation rate has fallen this month to its slowest pace since October as heavy rains boosted hydropower output, bringing down electricity prices, preliminary data from the National Statistics Institute (INE) showed on Friday.

The 12-month EU-harmonised inflation rate fell to 2.2% in March from 2.9% in February, INE said, while the non-harmonised national inflation rate declined to 2.3% from 3.0%.

The EU-harmonised rate was much lower than the 2.6% expected by analysts polled by Reuters, dropping to its lowest level since 1.8% in October.

The decline was driven by lower electricity prices as well as cheaper fuels and motor oil during March, INE said.

Core inflation, which strips out volatile fresh food and energy prices, stood at 2.0% year-on-year, the lowest since November 2021, when the rate was 1.7%.

The slowdown in inflation this month follows a six-month acceleration from September to February that contrasted with the rest of the 20-nation euro area.

(Reporting by Marta Serafinko, editing by Inti Landauro)