Spanish Prices Rise at Fastest Pace Since 2024 on Iran War

b44]vuvpmp7klcvtt)khj2g7_media_dl_1.png INEArticle content(Bloomberg) — Spanish inflation jumped to its highest level since June 2024 due to the Iran war, supporting the case for the European Central Bank to raise interest rates.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentConsumer prices rose 3.3% from a year earlier in March, data Friday showed. That’s up from 2.5% in February but short of the 3.8% median estimate in a survey of economists. The surge was driven by costlier fuel, statistics agency INE said.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article contentArticle contentSoaring energy prices brought on by the conflict in the Middle East are stoking fears of an inflation spike like the one that struck four years ago. Traders see the ECB stepping in and some officials are already pondering a hike in borrowing costs at next month’s meeting.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentPresident Christine Lagarde, however, said this week that she and her colleagues won’t act without sufficient information on the size and persistence of the shock.Article contentSpain is the first major euro-area economy to report price data for this month, with the 21 nation bloc itself only releasing its reading on March 31. The latest ECB outlook envisages prices will rise 2.6% this year, surpassing the 2% target.Article contentA separate ECB survey published Friday showed inflation expectations among euro-area consumers were falling as the war began. Prices were seen rising 2.5% over the next 12 months and the next three years — both down from the previous month, according to the Feb. 5-March 3 poll. For five years ahead, expectations were unchanged at 2.3%.Article contentThe ECB is focusing intensely on such findings as it tries to determine whether the gyrations in energy markets will spill over into consumer prices more broadly. Officials say they won’t allow a repeat of the 2022 shock that followed Russia’s invasion of Ukraine.Article contentArticle contentVice President Luis de Guindos said Thursday that if expectations start to de-anchor from target, the ECB “will have to react.”Article contentNew forecasts later Friday from the Bank of Spain are likely to revise up previous projections for domestic inflation of 2.1% in 2026 and 1.9% in 2027.Article content“The situation is very uncertain and highly volatile, and what we must do is continue assessing a wide range of information,” Governor Jose Luis Escriva said last week.Article contentWhat Bloomberg Economics Says…Article content“Higher energy prices drove the sharp rise in Spain’s inflation, in the first clear sign of the toll the Middle East conflict is taking on the euro-area economy. Absent the government’s latest support package, annual price gains were on course to peak at about 4.5% this year.

Prime Minister Sanchez’s hefty VAT cuts on energy mean that figure will now be about one percentage point lower. With energy prices showing no signs of easing, the risk is the Iran war might push the ECB to lift rates.”Article content—Ana Andrade. Click here for full REACTArticle contentThe government is acting already, rolling out a €5 billion ($5.8 billion) package of tax cuts and subsidies that focus on transport, agriculture and electricity bills.Article content“This is an absolute disaster,” Prime Minister Pedro Sanchez told lawmakers Wednesday. “Every bomb that falls in the Middle East ends up hitting — and we are already seeing it — our families’ pockets.”Article content—With assistance from Harumi Ichikura, Joel Rinneby, Mark Evans and Barbara Sladkowska.Article content(Updates with ECB survey, Bloomberg Economics starting in sixth paragraph.)Article contentTrending Meet the Canadian e-bike maker who is redefining the factory floor Electric Vehicles Iran oil revenue soars as it's the only exporter out of Hormuz Oil & Gas Markets could be making the wrong call on interest rates Investor Quebec demands Air Canada’s CEO resignation in 92 to 0 vote Airlines LNG Canada signs key pipeline agreement required for phase two expansion Energy Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. Meet the Canadian e-bike maker who is redefining the factory floor Electric Vehicles Iran oil revenue soars as it's the only exporter out of Hormuz Oil & Gas Markets could be making the wrong call on interest rates Investor Quebec demands Air Canada’s CEO resignation in 92 to 0 vote Airlines LNG Canada signs key pipeline agreement required for phase two expansion Energy