Phoenix 24
Electricity and fuel prices pushed inflation to its highest level since May 2024, extending a five-month run above the 3% threshold.
Madrid, Spain — August 2026. Spain’s annual inflation rate rose to 3.6% in July, one-tenth of a percentage point above the preliminary estimate and its highest level in more than two years, according to the National Statistics Institute.
The increase marks the fifth consecutive month in which inflation has remained above 3%, adding pressure to household budgets already strained by elevated housing costs and the wider cost-of-living crisis.
Energy was the principal driver. Fuel prices have continued to rise amid disruptions in the Red Sea and the partial blockade of the Strait of Hormuz, while successive heat waves have sharply increased electricity demand across Spain.
Wholesale electricity prices averaged approximately €105 per megawatt-hour in July, their strongest year-on-year increase since the energy crisis of 2022. The surge reflects the combined impact of geopolitical instability, constrained energy supplies and heavy summer consumption.
Diesel prices rose by more than 15% compared with the previous year, automatically triggering an expanded reduction in Spain’s hydrocarbon tax. The government will now apply a discount of €0.20 per liter instead of the previous €0.05.
The measure forms part of Madrid’s response to the energy crisis that followed American and Israeli strikes against Iran. Political parties to the left of the governing Socialist Party have questioned whether fuel distributors will fully pass the tax reduction on to consumers.
Food prices offered a measure of relief. Annual food inflation slowed to 1.6% in July, three-tenths of a point below June and its lowest rate since 2021. Fruits, vegetables and legumes became less expensive, while summer discounts also reduced clothing prices.
The moderation does not mean that food has become cheaper overall; prices are still increasing, but at a slower pace. Energy, transportation and housing-related expenses therefore remain the most significant threats to purchasing power.
Spain’s latest figures show how quickly distant geopolitical disruptions can reach ordinary households. Instability in strategic maritime corridors is now being reflected in electricity bills, fuel purchases and the daily cost of maintaining a home.
Inflation may be measured in percentages, but families experience it in every bill that leaves less money behind.