Alex Trelinski
SPAIN’S December inflation rate was confirmed as 2.8% on Wednesday by the National Statistics Institute- up by 0.4% on November’s figure, but down 0.8% on an annual basis.
Rising fuel and energy prices were the driving force behind the hike, while food inflation stood at 1.8% last month.
The increases in food and electricity prices compared to a year earlier are down to the government withdrawing its subsidies introduced in the wake of Russia’s invasion of the Ukraine in 2022.
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Culture and recreation prices increased to 3.2% in December from 2% in the previous month, mainly because of rising tourist package prices.
Spain’s year-on-year core inflation rate for December came up to 2.6%, which was a four-month high, in contrast with November’s 2.4%.
This was also in line with market expectations with core inflation not including energy and food prices due to their volatility.
In a statement, the Ministry of Economy said: “Throughout the year, inflation, both headline and core, has been falling continuously.”
“This annual reduction highlights the effectiveness of the economic policy measures put in place, which are making it possible to reconcile higher growth among the main economies of the euro area and a continued reduction in inflation,” it added.
The European Commission expects Spain’s inflation to average about 2.2% in 2025, before dropping to 2% in 2026, in line with the European Central Bank’s target.
It also expects Spain’s gross domestic product (GDP) growth rate to be 2.3% this year, before falling to 2.1% next year..
Spain’s CaixaBank expects core inflation to touch 2% this year – and for 2025 to be a robust one for the country’s economy, mainly because of rising private domestic demand.
However, the bank highlights that if geopolitical risks worsen, this may dampen economic growth.
This might include a tariff war between the US and EU, or EU and China, as well as an escalation of Middle Eastern conflicts, which may push up energy prices..
