Spain’s annual inflation rate climbed to 3.6 percent in July, marking the fifth consecutive month in which consumer price growth has remained above 3 percent, according to the latest figures from the National Statistics Institute.
The July reading was 0.1 percentage point higher than the institute’s earlier estimate and represented the highest inflation rate recorded in Spain since May 2024. Rising electricity and fuel prices were the main factors behind the increase as energy markets continued to face disruption linked to the partial closure of key shipping routes, including the Strait of Hormuz.
Electricity prices rose particularly sharply during the month. Average power prices reached about €105 per megawatt hour, marking the largest year-on-year increase since July 2022. That period was also characterised by severe pressure on European energy supplies following Russia’s invasion of Ukraine.
The latest increase comes during a period of intense summer heat in Spain. Successive heatwaves have increased demand for electricity as households and businesses rely more heavily on cooling systems. Strong consumer demand for power has added to pressure on electricity prices.
Fuel costs have also contributed to the rise in inflation. Diesel prices increased by more than 15 percent year on year in June, triggering an automatic reduction in Spain’s hydrocarbons tax under a government mechanism designed to respond to sharp fuel price increases.
Economy Minister Carlos Cuerpo said the tax reduction would provide a discount of 20 cents per litre instead of the standard five-cent reduction. The measure forms part of the government’s wider response to the energy crisis linked to military action in the Middle East.
The tax measure has faced criticism from parties to the left of the ruling PSOE. Critics have argued that fuel distribution companies may not be passing the full value of the tax reduction on to consumers.
Despite the broader rise in inflation, food prices provided some relief for Spanish households. The cost of the average shopping basket fell by 0.3 percentage points in annual terms during July.
Food inflation stood at 1.6 percent, down from June and the lowest rate recorded since 2021, according to the Economy Ministry. Prices for fruit, vegetables and pulses declined, while clothing costs also eased as summer sales reduced prices across the retail sector.
The latest figures present a mixed picture for Spanish consumers. Energy and transport costs are putting renewed pressure on household budgets, while slower food inflation is providing some relief.
