INFLATION in Spain has surged to its highest level in two years as the effects of the Iran war continue to ripple across the country, new data has shown.
Spain’s National Institute of Statistics (INE) announced on Friday that inflation climbed to 3.3% in March – the sharpest month-to-month rise since May 2022, and the highest level since June 2024.
Experts have linked the spike to rising fuel prices following Iran’s blockade of the Strait of Hormuz, and warned inflation was likely to remain above 3% in the coming months.
The increase came despite a €5-billion relief package approved by the Spanish government on Thursday. Among the 80 measures introduced were a VAT slash on fuel and a price cut of up to 30 cents per litre, which analysts believe may have softened the blow of the crisis.
Angel Talavera, Oxford Economics’ chief economist for Europe, told El Pais: “It’s a sharp increase, but it could have been worse. We need to wait and see the breakdown of fuels and electricity to understand the exact impact of the government’s measures.
“But we will probably remain above 3% in the coming months,” he added.
2026 had been tipped as the year inflation would finally cool, with prices expected to drift back towards the European Central Bank’s 2% target.
But that outlook was thrown off course on February 28, when a joint US and Israeli strike on Iran triggered a swift retaliation from Tehran – including the blockade of the Strait of Hormuz and attacks on key energy infrastructure across the Gulf region.
Since then, the picture has shifted dramatically. The Organisation for Economic Co-operation and Development (OECD) said on Thursday it expects inflation in Spain to average 3% this year – and that is only if the conflict does not drag on longer than anticipated.
While the knock-on effects of the war are already being felt, the Funcas research centre estimates that the government’s relief package could save drivers up to €90 in fuel costs by June.
READ MORE: Good news for motorists: Filling up now €10 cheaper after Spanish government slashes VAT on fuel
“Over the past week, fuel prices have fallen due to the implementation of fiscal measures,” Spain’s Economy Ministry said in a statement on Friday.
“But they continue to face upward pressure from international markets, particularly in the case of diesel, due to higher oil prices, freight costs and refining margins,” the statement warned.
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