The Bank of Spain warns of an upturn in inflation in 2026 and 2027

Barcelona / MadridThe Bank of Spain has increased its inflation forecasts, which it places, for this year and 2027, well above the targets set by the European Central Bank (ECB). The monetary body presented its quarterly macroeconomic forecast report this Friday, in which it also forecasts the growth of the Spanish economy.

Specifically, the Bank of Spain expects that in 2026 the State will close the year with an increase in consumer goods and services prices of 3.9%, almost double the 2% that the ECB sets as a medium- and long-term target. This figure represents an increase of three tenths compared to the institution's latest forecasts.

However, the significant upward revision has occurred in inflation for next year, which the Bank of Spain (BdE) has increased by 1.1 percentage points, to 3.7%.

The pressure on prices is, above all, the result of the moment that global energy markets are experiencing due to a conflict in the Middle East that shows no respite. The rise in the price of oil and natural gas due to the blockade of the Strait of Hormuz – the maritime route through which a large part of these fossil fuels passed – is transferred to the price of electricity, which in turn impacts an increase in business costs and the prices of certain services.

The impact of the measures

In this context, the Spanish government has extended until the end of the year the package of measures in response to the crisis in the Middle East to face the economic shock. These measures have helped to contain inflation – they include widespread reductions in energy taxes and direct aid to the most affected sectors – but they have also pushed the public deficit upwards, warns the Bank of Spain, due to their cost. In this way, the entity revises the public deficit upwards (up to 2.6% of GDP) for 2026, in line with what is foreseen by the Independent Authority for Fiscal Responsibility (Airef).

In fact, whether or not the measures continue beyond December – that is, from January 2027 onwards – will also depend on how the inflation rate behaves. Until the energy crisis slows down and demand moderates – household consumption but above all tourism continue to put upward pressure – prices will not give a respite.

The BdE study warns that "the trajectory of inflation in the coming months will be highly conditioned by the evolution of the energy shock". In this sense, the institution led by José Luis Escrivá points to "the acceleration of energy prices" as the main reason for the sharp price increases, above all due to "the increase in gas prices on an international scale, which has caused electricity to become more expensive in the wholesale market". In fact, "the inflation projection for 2026 is in line with the adverse scenario of the month of March", they warn from the Bank of Spain.

Wages below inflation

While inflation may reach 4% on average this 2026, salaries have grown below this figure and are expected to continue doing so in 2027. Specifically, the average salary increase in revised agreements, which affect about 3.1 million workers, would stand at 3.2%. The same applies to the 2026 revised agreements, where wage increases grow by an average of 2.9%. In contrast, in new agreements signed up to August 2026 (data has been collected up to this month), the upward salary revision is 3.7%.

More growth

Despite the bad news regarding the expected evolution of prices, the Bank of Spain points to growth in economic activity in the State and a reduction in unemployment. "We cannot think that without this [the conflict] we would have grown more. In principle yes, but what is relevant is that we expected growth like the one we have [...]. This shows that we have a productive structure that, from the point of view of families and businesses, resists better," pointed out the director general of economics of the BdE, David López Salido, during the presentation of the report this Friday.

Thus, the gross domestic product (GDP, the indicator that measures the size of an economy) will expand by 2.6% this year – the same figure as in 2025 – and by 2.2% in 2027, an upward revision of 0.3 and 0.5 percentage points respectively. "Despite the complex international context and the rising cost of energy, the Spanish economy maintains notable dynamism in 2026, supported by the strength of private consumption, job creation, and population growth," the report says.

The Bank of Spain attributes the improvement to the private consumption of families, which will remain "resilient until the end of 2026." Also to the export of products, goods, and services, which places Spain in a trade surplus. Export levels are explained above all by the services sector, and not only tourism, but also by activities that remain "constant." For example, consulting. "The resilience of global activity and the dynamism of services lead to an upward revision of the external sector," says the forecast report published this Friday.

The good performance of the economy will mean, in parallel, that the labor market will improve and the unemployment rate will go from the 10.5% officially registered last year to 10% this 2026, according to the BdE's forecasts. For 2027, unemployment will be 9.7% in accordance with the monetary entity's projections.