Spain’s inflation rises in February due to increasing energy costs.
Inflation in Spain surged by 3% in February compared to the same month last year, marking the fifth consecutive month of rising prices. According to preliminary data from Spain’s National Statistics Institute (NSI), this increase is the highest since June 2024, signaling a continued upward trend in the country’s price index.
The latest inflation rate reflects a 0.1% rise from January’s 2.9%, with the EU-harmonised inflation for February standing at 2.9%, slightly above initial forecasts. The primary factor behind this inflation spike is a significant increase in electricity prices, which has contributed to the higher cost of living. This marks a reversal from last year when electricity prices declined.
Energy Prices Drive Inflation
Electricity costs have been the main contributor to inflation, causing a sharp rise in energy prices across the country. While fuel and oils for personal vehicles saw a slower price increase than last year, the higher electricity prices continue to put pressure on overall energy inflation, keeping the country’s inflation rate elevated.
Despite this, core inflation—excluding food and energy prices—slowed to 2.1%, the lowest level since December 2021. This marks a decrease from the 2.4% recorded in January, offering a brief respite from the broader inflationary trend.
Monthly Inflation Increases
In February, Spain’s prices rose by 0.4% month-on-month, slightly above market expectations. This is in line with the EU-harmonised data, which also shows a similar monthly price increase. The rise follows a 0.2% increase in January, continuing the trend of climbing prices across Spain.
Spain’s Inflation vs. Eurozone Average
Spain’s inflation rate of 3% in February is slightly higher than the Eurozone average of 2.5%, which saw a slight increase from 2.4% in December 2024. This marks the fourth consecutive month of inflation increases in the region. The ongoing rise in prices across both Spain and the broader Eurozone has raised concerns among economists and investors.
ECB’s Challenge with Inflation Control
Despite positive signs that inflation is converging toward the European Central Bank’s (ECB) target of 2%, ECB President Christine Lagarde has warned that rising core inflation could limit the bank’s ability to lower interest rates further. This presents a challenge for the ECB, which is already navigating a delicate balance between supporting economic growth and controlling inflation.
As inflation continues to climb, both in Spain and across the Eurozone, policymakers will need to carefully manage monetary policies to ensure long-term economic stability.