Spanish Inflation Surges Past Eurozone Average, Raising Concerns About Purchasing Power

Spain's inflation rate has risen to 3.6% in July, its highest level since May 2024, according to data from the National Institute of Statistics (INE). This is nine tenths above the eurozone average and one point higher than the European Central Bank's target of 2%. The harmonized indicator used by Eurostat shows that Spain's HICP reached 3.9% in July, compared to 2.9% in the eurozone.

The increase in fuel prices has forced the government to activate a safeguard clause, raising the tax reduction on hydrocarbons to 20 cents per liter in September. Diesel prices rose by 15.7% year-on-year in July, while gasoline increased by 7.3%. Transport costs rose to 6.2%, mainly due to fuel and lubricant price increases.

The effects of inflation are felt across the board, with prices not returning to previous levels even if inflation moderates. This means that households with lower incomes are disproportionately affected, as they allocate a larger proportion of their income to essentials like food, housing, energy, and transportation.