Spanish inflation surged to its highest level since August, reaching 2.4% year-on-year in November, Bloomberg reports, citing data released Thursday by the national statistics agency.
While this represents an acceleration from October’s 1.8%, the increase is largely attributed to base effects – comparisons with unusually low energy and fuel prices from late 2023 – and is not expected to derail the European Central Bank’s (ECB) plans for further interest rate cuts.
The rise aligns with economist predictions and follows early indications of accelerating price growth in Germany. A key measure of underlying inflation, excluding volatile energy and some food prices, actually eased to 2.4%, defying analyst forecasts. This suggests that underlying inflationary pressures remain relatively contained.
The ECB anticipates a brief, temporary jump in inflation across the Eurozone, with analysts projecting a November figure of 2.3% for the entire region. The bank maintains its commitment to a fourth deposit rate reduction this year, bringing it down to 3%, in two weeks’ time. Further easing is anticipated in 2025, although ECB Executive Board member Isabel Schnabel has cautioned against excessively aggressive cuts.
Spain’s success in containing inflation this year contributed to its strong economic growth, outpacing other major European economies. While some government measures aimed at shielding consumers from high prices – such as VAT reductions on electricity – have been rolled back, others, including free train tickets, remain in place. The country’s robust economy is further highlighted by unemployment hovering near its lowest point in over 15 years, leading to wage growth and increased service prices – a persistent concern for the ECB.
