Spain’s inflation rate surged in December, driven primarily by increased transportation costs and a rise in cultural and recreational expenses. This uptick contributed significantly to the overall inflation figure.
According to the National Statistics Institute (INE), the year-on-year inflation for Spain in December 2024 climbed to 2.8%, up from 2.4% in November, marking the highest level since July last year. This increase aligns with analysts’ forecasts and signifies the third consecutive month of inflation growth.
The upward trend was largely attributed to base effects and a notable rebound in transport prices, which rose by 0.6% in December compared to a decline of -0.1% in November. Additionally, prices in the culture and recreation sector increased sharply, reaching 3.2% in December from 2% in the prior month, mainly due to rising costs for tourist packages.
Core inflation, which excludes the volatile prices of food and energy, also saw an uptick in December, reaching 2.6%. This figure represents a four-month high compared to November’s core inflation rate of 2.4%, still in line with market expectations. Month-on-month inflation rose to 0.5% in December, up from 0.2% in November, surpassing analysts’ predictions of a 0.4% increase.
Future Outlook for Spanish Inflation
Looking ahead, the European Commission anticipates that Spain’s inflation will average around 2.2% in 2025, easing to 2% by 2026, thus aligning with the European Central Bank’s goals. The Commission also projects a gross domestic product (GDP) growth rate of 2.3% for this year, gradually dipping to 2.1% the following year.
Financial services firm CaixaBank forecasts that core inflation in Spain may stabilize around 2% this year, attributing the expected economic robustness in 2025 to a rise in private domestic demand. However, they caution that escalating geopolitical risks could threaten economic stability, particularly if tensions arise from potential trade disputes between the US and the EU or China, or if conflicts in the Middle East intensify, likely pushing energy prices higher.
