Spanish inflation steady at 3.2% as energy costs rise

Spain's annual inflation rate remained unchanged at 3.2% in June, as higher electricity and gas prices offset the impact of cheaper fuel costs, according to data confirmed by the National Statistics Institute (INE).

The consumer price index (CPI) stayed well above the European Central Bank's 2% target despite recent tax adjustments, while core inflation, which excludes energy and unprocessed food prices due to their volatility, eased to 2.9% from 3.0% in May, matching the INE's preliminary estimate, Caliber.Az reports, citing Euronews.

Energy costs were a major driver of price growth during June, with electricity prices rising 6% year-on-year amid unusually warm weather that increased the use of air conditioners and fans in households across the country.

Electricity prices had fallen by 5.5% in April and 4.3% in May, helping to preserve a government VAT reduction introduced to soften the economic effects of the conflict in the Middle East. The removal of the reduced VAT rate is believed to have contributed to June's rebound in electricity costs, although the Economy Ministry emphasised that overall inflation remained stable.

Finance Minister Arcadi España welcomed the figures, writing on X: "June's CPI data confirm the effectiveness of the measures taken by the Spanish government. In an international context marked by uncertainty, inflation remains stable and food prices have slowed their growth to 1.9%. These figures reflect the impact of support policies for families and businesses, together with the push for renewable energy, which is strengthening the resilience of our economy".

First Vice-President and Economy Minister Carlos Cuerpo argued that the latest figures "confirm that the government's response plan is still meeting its goal: cushioning the impact of the war in Iran on inflation and protecting households' purchasing power".

Government officials further maintained that investment in renewable energy was "precisely what makes it possible to start phasing out emergency measures from a position of strength".

Food and non-alcoholic beverage prices provided some relief for consumers, with annual inflation in that category slowing to 1.9% in June from 2.2% the previous month.

Fuel prices also came under less pressure during June following a brief ceasefire between the United States and Iran, although renewed hostilities and continued disruptions in the Strait of Hormuz could once again drive energy costs higher.

According to the INE, petrol prices increased by 1.3% year-on-year, while diesel prices jumped 14.1%. Madrid has continued with its gradual withdrawal of fuel subsidies despite renewed tensions in the Middle East.

Housing costs recorded one of the sharpest increases, rising 4.7% in June compared with 1.4% in May, while transport inflation slowed to 5.1%. Prices for restaurants and hotels also climbed significantly, with accommodation costs surging 9.3% from a year earlier.

By province, Madrid registered the highest inflation rate at 3.8%, followed by Las Palmas at 3.6%. Cáceres and Jaén recorded the lowest figures at 2.2%, while Extremadura posted the smallest increase among Spain's autonomous communities at 2.4%.

By Bakhtiyar Abbasov