Producer price inflation in Spain moderated to 4.9% in March 2025, down from a two-year high of 6.7% in February. This deceleration was primarily driven by a significant slowdown in energy costs, which rose by 16.8% compared to 22.4% in the previous month.
Spain producer inflation slows in March
Within the energy sector, the most notable change came from electricity prices, which had been a major contributor to the inflationary pressures seen earlier in the year. The reduction in energy price growth provided some relief to overall producer price inflation, suggesting that the worst of the energy-driven price hikes may be behind Spain for the time being.
In addition to energy, prices for consumer goods continued to experience deflationary pressures, with a decline of -1.6% in March compared to -1.3% in February. This decrease was largely attributed to a drop in prices for non-durable goods, which fell by -1.8%, a steeper decline than the previous month's -1.4%. Specifically, the prices of vegetable and animal oils and fats saw notable reductions, contributing to the overall drop in non-durable goods prices. The deflation in consumer goods prices reflects broader trends in cost adjustments within the supply chain, as both commodity prices and demand for certain goods remain subdued.
Core producer prices figures
Excluding energy, producer prices showed a slight decline of 0.1%, after being flat in the previous month. This suggests that the broader inflationary pressures within the Spanish economy, apart from energy costs, are somewhat subdued, with no significant price increases seen in key industrial sectors. While this marginal dip indicates some stability in core producer prices, it also highlights the overall lack of strong inflationary momentum in Spain’s production sector at present.
On a monthly basis, producer prices dropped by 3.9%, reversing the upward trend from February, when prices had increased by 1.3%, following an upward revision. The sharp monthly decrease suggests that producer prices may be adjusting more quickly than expected, possibly due to seasonal fluctuations, changes in raw material costs, or a shifting demand outlook. These monthly changes also reflect the continued volatility in global commodity markets, which continue to exert a significant impact on Spanish production costs.
Overall, while the moderation in producer price inflation is a welcome development, particularly for consumers and businesses dealing with rising costs, the underlying inflationary dynamics remain sensitive to global economic conditions, energy price fluctuations, and domestic demand patterns. As Spain moves further into 2025, the trajectory of producer prices will likely depend on how energy prices evolve and whether there are any shifts in the global supply chain or commodity markets that could reignite inflationary pressures.
