A sudden spurt in Spain’s economy over the last three months created the fastest growth since the end of 2007.
Economic growth for the last three months was 0.6%, ahead of the Bank of Spain's forecasts of around 0.5%.
Spain emerged last year from a recession which dragged on for two years.
Now Spain’s Minister of Economy is predicted that GDP would grow by nearly 1.5% this year.
But the prices of goods have been coming down since the end of 2013, which leaves the country with the possibility of entering into deflation.
Deflation’s impact is to make consumers put off buying goods in anticipation of further price falls. When demand drops, businesses often have to cut back on staff.
Prices now are 0.3% lower than they were a year ago.
Spain's National Statistics Institute reported that: "This drop can be explained, mainly, by the stability of gasoline, food and non-alcoholic beverages prices following increases in 2013. The drop in electricity prices has also influenced this trend."
When Germany reported low inflation figures this week, fears were fanned of deflation contagion throughout the eurozone.
Portugal, along with Greece and Cyprus, have been in deflation for some months.
