The Spanish economy shrunk by 0.3 percent in the third quarter of the year, according to official data released on Tuesday, while the country's inflation hit 3.5 percent in October, the highest since May 2011.

The decline of the country's gross domestic product recorded the fifth quarter of contraction in a row, said a preliminary report conducted by Spanish National Institute of Statistics (INE), adding that on an annual basis, the economy slowed by 1.6 percent.

The INE is expected to give its full data on Spain's GDP for the third quarter on November 15, one day after the second general strike the country to hold this year.

Meanwhile, the Consumer Price Index, or inflation, rose by 0.1 percent during October following four consecutive months of price rises, hitting the highest level since May 2011, as a result of price hikes in fuel and medicines, said INE in another study.

Despite the economic gloom, Spanish Prime Minister Mariano Rajoy on Monday reiterated that his country was not on the verge of making a bailout request.

"It is not vital at this moment," Rajoy said, adding that his government would not make any requests until it had decided what was best "for the general interest of the Spanish people" while meeting his Italian counterpart Mario Monti.