Fuel prices push inflation to 4.9%, highest since 2023

Spain's inflation rate jumped to 4.9% in September, up from 4.3% in August, according to early data from the National Statistics Institute (INE) released Tuesday. This is the highest level since February 2023. The main driver is fuel prices, which have risen sharply due to growing tensions in the Middle East. Energy products are now 21.6% more expensive than a year ago. Fresh food prices also climbed 5.8% year-on-year. The figure was also affected by a "base effect": fuel prices fell during the same period last year, making the current increase look larger by comparison. Tourist package prices also contributed to the rise. Core inflation — which excludes volatile items like energy and food — rose to 3.1%, up two-tenths from August. This measure is seen as a better indicator of underlying price trends in the economy. On a monthly basis, prices rose 0.3% from August to September. The Harmonized Index of Consumer Prices (HICP), used to compare inflation across European countries, reached 5% for the first time since the energy crisis. Core HICP stood at 3.2%. In response, the Spanish government will extend tax cuts on gasoline and diesel until the end of December. The cuts will reduce fuel prices by 20 cents per liter in October, 13 cents in November, and 6 cents in December. A safeguard clause allows the government to increase these reductions if oil prices continue to surge. The government will also cap gas and butane prices ahead of winter, as European gas prices have more than doubled compared to before the war in Iran. The Economy Ministry said the measures have offset about half of the fuel price increase for households and have helped prevent "second-round effects" through support for transport and agriculture. According to the government, food prices have fallen 0.6% from March to August.