Spain’s August Inflation Shows a modest rise driven by energy and services, with core prices cooling slightly
In August, inflation ticked up for a second consecutive month, reaching 2.6 percent. That is three-tenths higher than July’s 2.3 percent and seven-tenths above the 1.9 percent level seen in June, which marked the lowest point since April 2021. The national statistics institute, the INE, noted that the final CPI reading would be confirmed on September 12, after the initial August estimates were published.
The month-over-month CPI rose by 0.5 percent in August, nudging the annual rate from 2.3 percent in July to 2.6 percent. A year earlier, prices in August had fallen in gasoline and diesel, but the current year’s rebound in energy and other goods contributed to the higher inflation print.
Electricity prices also played a role, reaching a six-month high in August. While the increase was significant, INE data show that it did not reach the peaks observed in the same month last year. Electricity costs rose about 0.4 percent month-on-month, helping to push the annual rate higher to 49.4 percent for the electricity component alone. This surge, while noteworthy, is tempered by changes in other price segments that dampened broader price pressures.
At present, INE does not release definitive clues about how food inflation developed in August. A detailed breakdown of price changes across goods and services will be published on September 12. For the time being, INE has issued a call to observe upcoming data releases. Core inflation, which excludes the more volatile energy and unprocessed food components, came in at 6.1 percent, down slightly from July by ten basis points. This easing in core prices suggests some domestically driven price stabilization despite the higher overall inflation.
Looking ahead, the latest projections from the Spanish central bank and government forecasts suggest that inflation will hover around 3.2 percent on average through the remainder of the year. The near-term trajectory reflects a cautious stabilization rather than a rapid deceleration, with energy costs continuing to influence the inflation path and consumer sentiment alike.
From a macroeconomic perspective, Spain’s inflation performance has supported a narrative of price stability relative to other euro area economies. The INE’s harmonized index, IPCA, is expected to remain at about 2.4 percent, slightly below the overall CPI pace of 2.6 percent. This difference helps maintain competitiveness for Spanish firms, potentially supporting wage gains and consumer purchasing power while keeping real incomes resilient in a mixed growth environment.
Overall, the August figures underscore a balanced inflation picture: a moderate rise driven by energy and services, offset by cooler trends in other components and a cooling core. Policymakers and households alike will watch September’s data closely to gauge the strength and speed of any further changes in the inflation cycle.