MADRID, Spain (AP) -- Spain says its year-on-year inflation rate has hit a 16-year-high of 5.3 percent.

Secretary of State for Economy Minister David Vegara says the rate is the highest since December 1992.

Vegara says it should drop below 4 percent by the year's end.

The National Statistics Institute said in a statement released Wednesday the July CPI dropped from the previous month by 0.5 percent, pushed mainly by a decline of 11.3 percent in clothing and footwear prices.

Spain's economy is cooling fast because of a collapse in the building sector.

The economy is expected to expand only 1.6 percent this year and 1.0 percent in 2009, compared with 3.8 percent in 2007.

The government is holding an extraordinary meeting on the crisis Thursday.

(Copyright 2008 by The Associated Press. All Rights Reserved.)