Economy minister, Pedro Solbes, said yesterday that the Spanish public "has not come to terms with the value of the euro," which he partly blames for the rise in the inter-annual inflation rate to 4.1%.

"We still don't know that 20 cents is worth 32 Pesetas and that one euro is worth 166 Pesteas," said Mr Solbes, adding that this can be seen in the size of tips people leave in restaurants, which, he said, can be as much as 50%.

Speaking in Madrid at the Economy in Progress Forum organised by the PSOE, the minister insisted that inflation will return to below 3%, but pointed out that "this will not happen before next March."

He also stressed that the diferential with the average inflation rate in the rest of the Euro zone remains at 1.1%, and that the average over the last four years (3.2%) is very similar to the rate during the previous government's tenure, and that this has been achieved in despite much less favourable conditions.

Referring specifically to the rise in last month's inflation figure, Mr Solbes said this was mainly due to higher basic food and fuel prices.