Fresh data from Spain's National Statistics Institute (INE) released on Friday (August 28) shows the country's consumer price index (CPI) rose 4.3% year-on-year in August, a sharp acceleration of 0.7 percentage points from July's final reading of 3.6% and slightly above the 4.2% consensus forecast. This marks the strongest annual increase since February 2023.

Stripping out unprocessed food and energy costs, the core CPI rose 2.9% year-on-year, easing 0.1 percentage point from the prior month. Meanwhile, the EU-harmonised index of consumer prices (HICP) climbed to a preliminary 4.5% annual rate, up from 3.9% in July. On a monthly basis, the headline CPI advanced 0.7%, while the HICP gained 0.6%.

Fuel prices and base effects are driving the overall index higher. The statistics office attributed the August acceleration primarily to two major components. First, fuels and lubricants for private transport: fuel prices rose during the month compared with a decline in the same period of 2025, with both current-period increases and unfavourable base effects combining to push the headline figure upward. As a reference point, the July final data showed diesel prices up roughly 15.7% year-on-year and petrol up about 7.3%. Second, food and non-alcoholic beverages: although prices fell during the month, the decline was considerably shallower than in the same period last year, exerting upward pressure on the annual comparison.

The preliminary figures reveal a divergence between headline and core trends. While overall inflation rebounded noticeably on the back of higher energy and refined product prices, the underlying basket excluding energy and fresh food showed no synchronised acceleration. Core inflation slipped marginally to 2.9% year-on-year, with the HICP-based core estimate coming in at 3.2%.

The current release is a flash estimate. The INE will publish the final August CPI figures — along with the precise contribution of each sub-component to the overall rate — in mid-September. On the policy front, the government has announced that from September it will raise the diesel tax relief to 20 euro cents per litre, with an estimated fiscal cost of roughly €1.825 billion. Whether this measure will effectively dampen fuel prices and pull subsequent inflation readings lower remains to be validated by the next data release.