Inflation Surge Fueled by Higher Transport and Cultural Prices

Spain’s inflation rate for December 2024 increased to 2.8%, up from 2.4% in November, according to the National Statistics Institute (INE). This marks the third consecutive month of inflation growth and is the highest rate recorded since July of the previous year. The uptick was primarily driven by a rebound in transport prices, which rose 0.6% in December, compared to a decline of 0.1% in November. In addition, prices for culture and recreation surged to 3.2%, up from 2% the previous month, due to rising tourist package costs.

The increase in inflation also reflects base effects, which occur when comparing current prices to those of the same month in the previous year. Spain’s core inflation, which excludes volatile energy and food prices, reached 2.6%, the highest in four months, up from 2.4% in November.

Outlook for 2025: Inflation to Moderate, GDP Growth to Slow

Looking ahead, the European Commission expects Spain’s inflation to average 2.2% in 2025, slightly below the current rate, and then drop to 2% in 2026, in line with the European Central Bank’s inflation target. Spain’s GDP is projected to grow by 2.3% in 2025, before slowing to 2.1% in 2026.

Spanish financial services company CaixaBank also forecasts core inflation to reach around 2% this year, with private domestic demand playing a key role in supporting economic growth. However, CaixaBank warns that rising geopolitical risks, such as a potential tariff war between the US and EU or escalations in the Middle East, could hinder economic growth and increase energy prices.