Spain July 12-month inflation speeds up to fastest rate since 1984

July 29 (Reuters) – Spanish consumer prices rose 10.8% year-on-year in July, the fastest pace since September 1984, up from 10.2% the previous month, preliminary data from the National Statistics Institute (INE) showed on Friday.

The reading was higher than the 10.6% forecast by analysts polled by Reuters.

Core inflation, which strips out volatile food and energy prices, was 6.1% year-on-year, the highest since January 1993 and up from 5.5% a month earlier, the INE data showed.

Spanish European Union-harmonised prices rose 10.8% from a year earlier, up from 10.0% in June and faster than the 10.4% expected by analysts polled by Reuters.

In Spain, INE said the inflation is mainly due to higher prices for food and non-alcoholic beverages, as well as electricity, which dipped compared with the period through June, though.

On Tuesday, Spain raised its inflation forecasts for 2022 and 2023 as the war in Ukraine is having a continued negative impact on European economies. 

Russia’s invasion of Ukraine and the subsequent pressure on energy and food markets has stoked inflation, which was already accelerating as the global economy emerged from the coronavirus pandemic.

European politicians have repeatedly warned Russia could stop gas flows completely this winter, which would thrust Germany into recession and send prices for consumers and industry soaring even further.

(Reporting by Joanna Jonczyk-Gwizdala and Emma Pinedo, Editing by Inti Landauro and Angus MacSwan)