Spain March inflation 3.4%; core 2.9% as energy rises

Spain’s consumer prices rose 3.4% year-on-year in March, slightly above a 3.3% preliminary estimate. Core inflation, which excludes energy and unprocessed food, rose to 2.9% from 2.7% in February. Headline inflation stood at 2.3% in February.

The increase in headline inflation was driven by higher energy costs. Analysts link the rise in energy prices to tensions between the United States and Iran and to disruptions in shipping through the Strait of Hormuz. The Strait is a major route for seaborne oil, and restrictions on shipments have tightened global energy markets and pushed up wholesale and consumer energy prices.

Market participants watched developments in the Gulf for signs of a return to normal shipping. Many investors treated the recent price rise as a geopolitical shock rather than a change in domestic demand, while monitoring for signs that higher energy costs could spread to other prices.

Economists note that headline inflation can move quickly with energy price swings, while core inflation typically changes more slowly. Prolonged elevated energy costs can raise production and transport expenses for goods and services and influence inflation expectations, which may feed into broader price pressures over time.

Policymakers are monitoring whether the rise in core inflation is temporary or more sustained, given central banks’ focus on underlying inflation. Spain’s reliance on imported oil and gas makes its inflation sensitive to shifts in global energy markets.