By Daniel Basteiro | Updated on Oct 09, 2026 at 12:00 PM
Spain’s central bank increased its inflation forecast, underscoring how the economy is experiencing stronger pressures than in the wider euro area.
Consumer-price growth will reach 3.9% this year, 0.3 percentage point above the June forecast, according to projections published Friday in Madrid. Across the euro zone, inflation is projected at 3% in 2026.
“Energy prices have risen across the board, driving inflation higher,” the Bank of Spain said in its report. The recent increase in inflation in Spain has been more pronounced than in the region, widening the inflation differential between the two from 0.5 percentage point in April to 1.2 percentage points in September.
“At the beginning of 2027, inflation is expected to pick up, reflecting the end of energy tax cuts and public transport discounts, before subsequently embarking on a downward path,” says the report.
Inflation is seen slowing slowly to 3.7% in 2027, markedly higher than a previous estimate of 2.6%.
Despite the inflation shock, Spain’s economy is expected to maintain robust growth. Gross domestic product will rise 2.6% this year and 2.2% in 2027, the central bank said. Both of those numbers are higher than in the June forecast.
Spanish Prime Minister Pedro Sánchez called a snap election for Nov. 29 after parliament blocked his plan to tackle soaring housing costs.
According to the Bank of Spain, “developments in housing investment are one of the factors shaping the outlook for economic activity over the coming quarters.”
A housing shortage estimated by the central bank at 750,000 units, and projected to reach 1 million by 2028, has sent prices soaring.
“The supply response in terms of new housing production has been weaker than expected, against a backdrop of labor shortages, rising construction costs and in particular, difficulties in urban development projects,” the bank said.