Spanish Inflation Rises to 3.5% in July Driven by Fuel and Electricity

• Spain's year-on-year inflation reached 3.5% in July, a 0.3 percentage point increase from June.
• Rising costs of fuel and electricity are the primary drivers of the recent inflationary spike.
• Core inflation rose slightly to 3.0%, matching levels seen two months ago.

Drivers of Price Increases

• Fuel prices increased significantly as demand spiked during the peak summer vacation season.
• Electricity costs reached a new peak, surpassing the 3.4% rise recorded in March.
• Global energy markets remain affected by geopolitical instability, specifically the closure of the Strait of Hormuz following actions by Israel and the United States against Iran.

Economic Context

• The month-on-month increase in prices was 0.2%, representing a slower rate of growth compared to the 0.6% increase observed in June.
• Current monthly price growth remains significantly lower than the 1.2% monthly spike observed in March during the initial onset of recent energy market volatility.