Spain | Good inflation, bad inflation

Summary

Part of the higher inflation we are seeing in Spain is due to a recovery in demand thanks to strong progress in the COVID-19 vaccination drive and economic support policies. Another part is explained by factors that could slow down growth.

Key points

• Key points:
• The areas with the greatest positive impact on inflation in August were leisure, the arts, hotels and restaurants, which benefited from higher consumer confidence on spending on social settings and the positive impact of public policies.
• Other sectors contributed to price growth, however, driven by factors that may slow down the recovery.
• Higher inflation in food and non-alcoholic beverages was affected by rising transport costs and a relative shortage of shipping containers.
• Shortages of intermediate inputs caused by breaks in value chains are driving up the cost of making industrial goods such as automobiles.
• Finally, the rising cost of energy is caused by upward pressure on gas and carbon emission prices.

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