Spain's inflation reaches 4.3% in August 2026 as fuel costs rise amid Iran conflict

Fuel costs accelerate August price index

Spain's annual inflation rate reached 4.3% in August 2026, according to preliminary data released on 28 August by the National Statistics Institute (INE). The figure represents an increase of 0.7 percentage points compared to July, when inflation stood at 3.6%, and exceeds market expectations of approximately 4%. The surge brings the consumer price index to its highest level since February 2023, when annual inflation stood at 6.0%. On a month-on-month basis, consumer prices grew by 0.7% between July and August, marking the seventh consecutive month of price increases and the largest monthly rise since March. INE pointed to rising costs for automotive fuels and lubricants as the primary factor behind the increase, contrasting with price drops recorded for those products in August 2025.

Headline inflation in August stands at 4.3% in year-on-year terms, mainly due to the rising cost of fuels caused by the persistence of the energy shock resulting from the war in Iran.

Energy shock and geopolitical pressure

The price acceleration reflects renewed instability across international energy markets linked to the conflict involving Iran. Crude prices climbed following the end of a truce between the United States and Iran in late July, which resulted in reinstated maritime restrictions in the Strait of Hormuz. Six months after initial strikes carried out by Israel and the United States, oil costs have moved rapidly into retail fuel stations across Spain. Seasonal demand from holiday travel added further pressure on fuel prices throughout August. Food and non-alcoholic beverages also contributed to the headline index, as their prices declined less in August than during the same month in 2025. Final and itemized consumer price data will be released by the statistics agency on 15 September.

Core inflation and food price trends

In contrast to the headline metric, underlying price pressures moderated slightly during the month. Core inflation, which strips out unprocessed food and volatile energy goods, dropped by 0.1 percentage points to 2.9% in August. This left the core measure 1.4 percentage points below the headline rate, indicating that businesses have not yet broadly passed higher energy costs onto consumer goods. Food price inflation had already shown steady moderation earlier in the year, declining from a 3.0% annual rate in January to 1.6% in July, its lowest level since 2021. However, the European Central Bank has voiced concerns that firms may struggle to absorb elevated production expenses indefinitely if energy market disruptions persist.

Government response and tax measures

To cushion the impact of rising fuel costs, the Spanish government announced adjustments to its fiscal relief package under Royal Decree-Law 18/2026. The department headed by Carlos Cuerpo confirmed that the state hydrocarbon tax discount for diesel will increase to 20 cents per litre starting 1 September 2026. The tax relief for gasoline will remain at 5 cents per litre, reflecting steeper price rises observed in refined diesel. The adjustment follows the gradual phase-out of earlier public fuel subsidies initiated in July. Officials stated that all other relief measures within the national response plan remain active as scheduled.

The government maintains minute-by-minute monitoring of the impact of the conflict in Iran on the Spanish economy, hand in hand with social partners and the most affected sectors.