Spain inflation confirmed at 2.7%

Spain’s annual inflation rate rose for the second consecutive month in July 2025, reaching a five-month high of 2.7% and confirming the preliminary estimate.

The acceleration was driven mainly by housing and utilities prices, which surged 6.7% from 4.2% in June, largely due to higher electricity costs following a rebound in wholesale energy prices. Transportation prices also contributed positively, increasing 0.2% after falling 0.8% in June, with much of the uptick linked to higher fuel prices amid seasonal travel demand.

Core inflation — which excludes volatile food and energy components — inched up to 2.3% from 2.2% in June, marking its highest level in three months and matching earlier estimates. The persistence of underlying price pressures suggests that inflationary momentum is not solely tied to energy market fluctuations but also to services and other consumer goods.

On a harmonised basis, which allows for EU-wide comparison, consumer prices also rose 2.7% year-on-year, in line with the flash estimate. On a monthly basis, the harmonised CPI fell 0.3%, a slightly smaller decline than initially expected (-0.4%), reflecting less pronounced seasonal discounting in some retail categories.

The data underscores the delicate balancing act for policymakers: while headline inflation remains close to the European Central Bank’s 2% target, renewed upward pressures in energy and sticky core inflation could complicate expectations for further monetary easing.

With household purchasing power still recovering from previous cost-of-living spikes, sustained increases in electricity and fuel costs may weigh on private consumption in the coming months, even as the broader eurozone inflation trend appears relatively stable.