Inflation Rates Spain 2026

Spain's HICP inflation is approximately 2,8% year-on-year as of December 2025 — above the eurozone average of 2,4% and above the ECB's 2% target. Spain's inflation has been persistently above the eurozone average because of strong economic growth (3,1% GDP in 2025) and tourism-driven services price increases. Spain's peak was 10,8% in July 2022.

Three main factors keep Spanish inflation above the eurozone average: (1) Strong economic growth (3,1% GDP) creates demand-pull inflation — hotels, restaurants, and services charge more when demand is strong; (2) Tourism-driven services inflation — record tourist numbers (82+ million in 2025) support high hospitality pricing year-round; (3) The 2023-2024 food VAT reduction being phased out in 2025-2026 adds mechanical upward pressure to food CPI as VAT is restored. Spain's inflation reflects economic dynamism, not structural weakness.

Spain's CPI peaked at 10,8% in July 2022 — one of the highest in major Western European economies. Spain had significant exposure to natural gas prices (for electricity), food export prices (global agricultural inflation hit Spanish food producers), and had less fiscal capacity to shield consumers than France or Germany. The Spanish government introduced the excepción ibérica (Iberian Exception) with Portugal — capping the gas price used in electricity generation — which effectively limited Spanish electricity inflation and prevented an even higher peak.

The excepción ibérica was a special mechanism approved by the EU in 2022 allowing Spain and Portugal to cap the gas price used in electricity generation at €40-70/MWh — far below market gas prices of €200-300/MWh at peak. This disconnected Spanish electricity prices from European gas markets, keeping Spanish electricity bills significantly lower than Germany or Italy. The mechanism is estimated to have reduced Spanish CPI by 2-3pp from its peak and saved Spanish households approximately €1.000/year in electricity costs at peak energy prices. It was phased out in 2023 as gas prices normalised globally.

Spanish inflation is expected to moderate gradually to approximately 2,3% by end-2026 as the VAT restoration completes and economic growth normalises. Persistent risks: ongoing tourism-driven services inflation; Spain's tight housing market (increasing rents and construction costs); and strong labour market wage growth. The Banco de España projects convergence toward the ECB target by 2027. Spain's strong growth trajectory (renewable energy investment, EU Next Generation Fund absorption, demographic growth from immigration) suggests above-average inflation is likely to persist for several years.