Lorraine Williamson
In February 2025, Spain’s Consumer Price Index (CPI) increased by 0.4% compared to the previous month, elevating the annual inflation rate to 3%, the highest since June 2024. This marks the fifth consecutive month of rising inflation, primarily driven by increased electricity costs.
Electricity prices drive inflation
The surge in electricity prices is a significant contributor to the inflation uptick. This increase is partly due to the reinstatement of the 21% VAT on electricity from January 1, 2025, after a period of reduced rates.
Fuel prices offer slight relief
Despite the overall rise in inflation, fuel prices have provided some respite. In the week of February 18 to 24, petrol prices decreased by 0.19%, averaging €1.570 per litre, while diesel prices fell by 0.13% to €1.498 per litre. Over the past month, petrol and diesel prices have declined by 0.57% and 0.53%, respectively. However, since the beginning of the year, petrol has increased by 2.21% and diesel by 3%.
Core inflation trends
Core inflation, which excludes unprocessed food and energy products, decreased by three-tenths of a percentage point to 2.1% in February, the lowest rate since December 2021. This suggests that underlying price pressures may be easing.
Harmonised index of consumer prices
The Harmonised Index of Consumer Prices (HICP) remained steady at 2.9% year-on-year in February, with a monthly increase of 0.4%. The National Institute of Statistics (INE) will release the final CPI data for February on March 14, 2025.
In summary, Spain’s inflation rate rose to 3% in February 2025, driven mainly by higher electricity prices following the VAT rate adjustment. While fuel prices have slightly decreased, their year-to-date increase continues to impact consumers. However, the decline in core inflation offers a glimmer of hope for stabilising underlying price pressures in the coming months.