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Date Published: 16/07/2025

Food and fuel shoot up in price across Spain due to the conflict in Israel

Inflation in Spain rose far more sharply last month than experts had initially predicted

The conflict in the Middle East was always going to have a knock-on effect in western countries but even the financial experts are surprised by how much, and how quickly, prices have risen as a result. Inflation in Spain jumped by 0.1% more than expected in June, driven by the impact of the war between Israel and Iran on fuel and food prices.

New data from the National Statistics Institute shows that inflation hit 2.3% in June, the highest it has been since March. This came after three months of calmer price increases, but that run is now over. Rising global tensions have pushed up the cost of living and many households in Spain are already feeling the pinch.

Fuel costs are the main reason behind the surge. Oil and gas prices have reacted quickly to uncertainty in the Middle East, and that change is being felt at the pump. Food prices are also climbing again. The overall cost of groceries rose by 2.8% last month. Meat, fish and seafood are leading the way, while legumes and vegetables are slightly more stable.

But not everything is going up. Olive oil prices have dropped sharply, now almost 50% cheaper than they were in April last year. Some other items, like hotel stays and holiday packages, are also seeing more modest price increases than expected, despite the start of the summer high season.

Still, many people are struggling to keep up. The USO trade union says that even though average wages have gone up by 3.39%, some essential goods are increasing in price even faster.

“Do we really think we've regained purchasing power? How much of our salary do we spend on food and how much on replacing household appliances each month? It's clear that either we act on prices or we act on wages,” said general secretary Joaquín Pérez.

It's little wonder that consumer debt is reaching all-time highs in this country.

Core inflation, which strips out fresh food and energy costs, held steady at 2.2% for the second month in a row. This is seen as a sign that the rise in prices may not yet be permanent, but it is still something to watch closely.

The Balearic Islands and the Basque Country recorded the highest inflation rates in the country at 2.8%, while the Region of Murcia and the Canary Islands saw the lowest at 1.7%.

Despite the uptick, the Spanish government insists that overall inflation remains under control. Officials say the country is in a strong position, with steady price levels and growing wages helping families to maintain their spending power. Economic growth, they point out, still looks stronger than in most of the rest of Europe.

At a European level, the inflation rate being used to compare countries reached 2.3% in June. That has the European Central Bank’s attention. Officials there are especially alert to possible trade tensions coming from the United States, particularly after Donald Trump’s announcements about new tariffs.

For now, the ECB is sticking with a cautious approach. Interest rate decisions will be made step by step, based on how the economic outlook continues to evolve.

In other news: New Hunger Games movie is being filmed in Spain

Image: Freepik

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