Spain's Inflation Outpaces Europe Due to Rising Energy Prices and Expiring Fiscal Measures

Spain recorded a 3% year-on-year inflation rate in November 2025, surpassing the European Union average by a full percentage point, according to recent reports. This elevated inflation, although marginally lower than October, is primarily driven by increased energy costs, with electricity prices rising by 18% over the past year.

Experts attribute the inflation differential largely to the energy sector, where household and energy costs contribute 0.7 percentage points of the gap compared to Europe. A key factor is the expiration of fiscal measures that had previously mitigated energy prices, leading to higher costs for consumers. Additionally, Spain's increased reliance on gas for electricity generation has amplified these price hikes, a trend intensified by extreme weather events and a significant power blackout in April, which necessitated greater gas usage.

Despite the current inflationary pressures, expectations remain cautious but optimistic, with forecasts suggesting a gradual reduction of the inflation gap and an approach toward a 2% target rate in the near term. This ongoing situation highlights the critical impact of energy policies and market conditions on Spain's broader economic environment relative to its European neighbors.