Lorraine Williamson
Spain’s inflation rate jumped to 4.3% in August, its highest level in more than three years, with sharply rising fuel prices responsible for much of the increase. The final figures published by Spain’s National Statistics Institute (INE) on Tuesday confirm that inflation rose by seven-tenths of a percentage point from 3.6% in July, taking it to its highest level since February 2023.
Prices also rose 0.7% between July and August alone, an unusually sharp monthly increase for August.
But the headline 4.3% figure does not mean everything in Spain has become 4.3% more expensive. The latest breakdown shows that energy, and particularly the cost of filling a car, is having a disproportionate effect on the overall rate.
Diesel and petrol drive prices higher
Transport prices were 9.5% higher than a year earlier, with motorists facing some of the steepest increases.
Diesel was 30.3% more expensive than in August 2025, while petrol prices were up 16.9% year-on-year. During August alone, diesel rose by around 11.5% and petrol by around 8%.
The wider category covering fuels and lubricants for personal vehicles has been one of the main forces pushing Spain’s inflation rate upwards. The Government has attributed much of the pressure to higher international energy prices linked to the continuing conflict in the Middle East.
EFE – August inflation and fuel price breakdown
The figures are particularly notable because the Government introduced temporary fuel support during the summer. A further change came on 1 September, after the period covered by today’s inflation figures, when the diesel discount increased from 10 cents to 20 cents per litre while the petrol discount was reduced from 10 cents to five cents.
That means the effect of September’s altered discounts is not reflected in today’s 4.3% inflation figure.
What about food prices?
The picture at the supermarket is considerably less dramatic than at the petrol station.
Food and non-alcoholic drinks were 2.3% more expensive than a year ago, well below the overall inflation rate. However, individual products continue to show much larger increases.
Eggs were around 12.5% more expensive than a year earlier, while citrus fruit rose 17.1% and pulses and vegetables increased by 15.9%.
Electricity is another area where households are feeling pressure, with electricity prices around 9% higher than a year ago.
Despite those increases, one important measure suggests the price pressures beneath the headline figure are not accelerating at the same rate.
Underlying inflation actually falls
Underlying inflation, which removes the more volatile prices of unprocessed food and energy, fell slightly from 3% to 2.9% in August.
That creates a significant gap between Spain’s headline inflation of 4.3% and its underlying rate of 2.9%, reinforcing the extent to which energy is driving the latest increase.
The Ministry of Economy said the lower underlying rate indicates that broader price pressures remain more contained, despite the energy shock.
There are nevertheless considerable differences depending on where in Spain people live.
Cantabria recorded the country’s highest annual inflation rate at 5.1%, followed by Galicia at 4.8%. Castilla-La Mancha, Castilla y León and Madrid were among the regions recording rates of 4.7%.
Andalucía recorded annual inflation of 4%, below the Spanish average, while the Canary Islands had one of the lowest regional rates at 3.8%.
What does the 4.3% figure mean for rents?
Today’s figures also come alongside the latest Reference Index for Housing Rentals (IRAV), which is particularly relevant to tenants whose contracts fall under Spain’s newer rental rules.
The August IRAV stands at 2.47%, slightly below July’s 2.49%. This is separate from the headline CPI and is designed to limit annual rent increases on contracts to which the new index applies.
Which index applies depends on factors including when the rental agreement was signed and what the contract says. The publication of a 4.3% CPI figure therefore does not mean every landlord can automatically increase a tenant’s rent by 4.3%.
For a qualifying rental contract subject to the IRAV, the 2.47% reference figure is the important one to check rather than simply applying headline inflation.
September fuel changes could shift the picture again
August’s figures pre-date the Government’s latest changes to fuel discounts, making September’s inflation reading particularly important.
Diesel motorists are now receiving a larger discount at the pump, while petrol drivers receive less support. The current fuel measures are due to run until the end of September unless the Government extends or changes them.
For now, the August figures show an unusual split in Spain’s cost-of-living picture: headline inflation is at its highest since early 2023, but much of that increase is being driven by energy rather than a comparable rise across everyday goods and services.
For households, that means the impact will vary considerably. Those who drive regularly or have energy-heavy household costs are likely to feel the current increase far more sharply than the 4.3% headline figure alone suggests.