The Spanish economy maintains growth, but inflation rises to the highest levels of the last two years
The CPI grows 3.5% in July in the State, while GDP grows 2.7% in the second quarter
BarcelonaThe Spanish economy maintained its high growth rate of recent years in the second quarter of 2026, above the European average. However, at the same time, the cost of living for families continues to rise, and this July will close at its highest levels since May 2024.
Specifically, the Gross Domestic Product (GDP, the indicator that measures the size of an economy) of the State registered between April and June a growth of 2.7% compared to the same period last year, a remarkable figure despite the effects derived from the war in Iran. According to the first estimates published this Thursday by the National Statistics Institute (INE), it is an improvement identical to that of the first quarter of 2026.
In inter-quarterly terms, the Spanish economy registered an increase of 0.7%, one tenth more compared to the period between January and March. In this regard, household consumption is consolidating as one of the main drivers of growth in the country, with a quarterly advance of 0.7% and an annual improvement of 3.2%. The Minister of Economy, Carlos Cuerpo, has indicated that this increase in family consumption is due to "the solidity of the labor market," where unemployment has been falling compared to recent years and where, above all, the record figures for Social Security affiliates stand out.
Cuerpo has described the data as "good news" in a message sent to the media. "Our growth is accelerating" and is "solid," he added, as it is supported by "investment" and the good performance of industry.
In fact, investment increased by 0.5% in the second quarter compared to the first, with an annual increase of 4.7%. Exports also increased, with a quarterly increase of 0.8% and an annual increase of 0.3%, a result of the relative pause experienced during the spring in the trade war between the United States and the European Union and of the talks to reach a ceasefire in the conflict in Iran. Likewise, imports also rose, in this case by 0.6% compared to the previous quarter and 2.1% annually. Public consumption also grew by 0.3% quarterly and 2.7% compared to the same period in 2025.
By sectors, it should be noted that all registered positive figures. Thus, industry increased its activity by 1% compared to the previous quarter, with an annual increase of 1.8%. Services, which represent more than two-thirds of GDP, grew by 0.8% quarterly and 3.4% annually, driven by household consumption. Finally, construction registered increases of 0.6% compared to the first quarter and 4.1% annually, while the primary sector rose by 0.2% and 3.2%, respectively.
Rising inflation
For its part, inflation in Spain during July increased by three tenths compared to June's rate, reaching 3.5% annually, the highest figure since May 2024, according to the advanced data also released this Thursday by the INE on the consumer price index (CPI, the indicator that measures families' cost of living). The increase is mainly explained by the rise in the cost of fuel and electricity due to the conflict in the Middle East, moving the State away from the 2% target pursued by the European Central Bank (ECB).
Despite this, the pace of price growth has slowed, although prices continue to rise. This month, the CPI increased by 0.2% compared to June, four tenths below the rate between May and last month, which was 0.6%. In turn, core inflation – which excludes energy and food – grew by one tenth and stands at 3% annually.
Given the instability and geopolitical tensions, the Spanish government secured the support of the Congress of Deputies last week to maintain some of the measures aimed at mitigating the effects of the war. The extension will last for three months, and tax reductions will be progressively withdrawn. According to data provided by the executive itself, the measures implemented last March have cushioned by more than 60% the price increase due to the shocks of the conflict in the Middle East. In other words, they have contributed to reducing inflation by an average of one point in recent months.