Spain producer prices drop in August

Producer prices in Spain fell by 1.5% year-on-year in August 2025, reversing an upwardly revised 0.4% increase in July and marking the first decline in three months.

The drop was largely driven by the energy sector (-4.5% vs +1.9% in July), reflecting lower wholesale electricity costs and more moderate increases in gas production and pipeline distribution compared with the same period last year. This shift highlights how energy price volatility remains the key determinant of Spanish PPI trends, especially as renewables and imported gas flows reshape the country’s energy mix.

Excluding energy, price dynamics were mixed. While intermediate goods posted slight declines, suggesting easing cost pressures along the supply chain, prices of consumer goods and capital goods remained relatively firm. This underlines the resilience of domestic demand and points to lingering pass-through effects from elevated wages and higher input costs in earlier months.

On a monthly basis, producer prices fell 0.4% in August, extending the previous month’s decline.

The sequential weakness indicates that cost pressures on Spanish manufacturers are easing, which could provide some relief for downstream consumer inflation in the coming months. However, analysts caution that the disinflationary trend remains fragile, as geopolitical tensions and potential energy supply disruptions heading into winter may reignite volatility.

Looking ahead, the fall in PPI adds to signs that Spain’s inflation environment is stabilizing, supporting the European Central Bank’s cautious stance on interest rates. With headline consumer inflation having recently edged higher on food and services, the decline in producer prices offers some balance, potentially softening cost-push pressures.

Still, businesses report that elevated wage demands and persistent price increases in certain service-related inputs continue to weigh on competitiveness, leaving policymakers alert to risks of uneven disinflation across sectors.