- Prior +2.3%
- HICP +3.3% vs +3.9% y/y expected
- Prior +2.5%
This is the first indication that higher energy prices are starting to see an impact. The monthly inflation estimate shows a 1.0% increase, which is the highest since February 2023. That is leading to headline annual inflation in Spain rising to 3.3%, which is the highest since June 2024. That despite missing on estimates as seen above.
The good news at least is that core annual inflation is continuing to keep stable at 2.7%. And that is unchanged from the reading seen in February.
That being said, higher energy prices will eventually play a role in lifting broader prices in the economy. That especially if it sticks around for too long. We already got a taste of that from the Russia-Ukraine conflict back in 2021-22. And still to this day, the impact is being felt.
As such, a repeat of that – even if on a smaller scale – is not exactly a welcome development as it will just push up core prices in the economy eventually. In turn, that will make it tougher for households and also undo the policy steps by the ECB in the past two years.
Just keep in mind as well that the longer the Middle East conflict rages on, the more profound the impact this will have on energy prices. And in turn, that will feed into inflation pressures all around.
