The war in Iran drives up the price of fuels and the cost of living for families

BarcelonaThe increase in fuel prices caused by the war in the Middle East rocketed the cost of living in Catalonia and Spain in March, the first month with the effects of the war, according to data from the consumer price index (CPI, the indicator that measures the cost of living for families) published this Tuesday by the National Statistics Institute (INE).

Thus, in Catalonia, the prices of consumer goods and services for households closed last month with an increase of 3.1% compared to a year ago, a figure that far exceeds the annual rate of 2% with which February had closed, when the effects of the US and Israeli attacks against Iran were not yet felt. If compared to the previous month, the price growth was 1.1%, six tenths more than the monthly rate between January and February.

As for the State as a whole, prices rose by 3.4% compared to March 2025. Thus, the INE revises the definitive CPI data for March upwards by one tenth compared to the first estimate it published on March 27. Compared to the previous month, the increase was 1.2%, two tenths more than predicted three weeks ago by the statistical body.

"This figure is mainly explained by the increase in fuel prices, a direct effect of the conflict in the Middle East," the Ministry of Economy stated in a press release sent to the media this Tuesday. The March prices reflect the first effects of the package of fiscal measures approved by the Spanish government

on the 20th of that month, which includes a reduction in VAT and other special taxes on fuels, electricity, natural gas, as well as additional aid to the professional groups most affected by the energy price increase, such as farmers or transporters.

Core inflation (which excludes energy and fresh food, which are more volatile) was 2.9% year-on-year in Spain, two tenths above February's level.

The impact of the war

Fuels are the element that has most driven up the cost of living. In the country as a whole, in just one month fuel prices rose by 4.5%, a very significant increase considering that, under normal conditions, monthly increases are usually less than 1% or, in some cases, even negative. If we look only at fuels for personal vehicles, i.e., the gasoline and diesel that families use for their cars, the increase was 14.3% between February and March.

This sharp increase is explained by the effects of the war against Iran, initiated by the United States and Israel on February 28. Hostilities, which have spread to most countries in the region —such as Saudi Arabia, Qatar, Bahrain, Iraq, or Kuwait—, have affected the energy infrastructure of many of these states, which are among the world's leading exporters of oil and natural gas. Furthermore, the Iranian government has blocked the passage of ships through the Strait of Hormuz, the gateway to the Persian Gulf from the Indian Ocean, through which a fifth of the crude oil consumed on the planet passes.

This inability to export oil and gas, along with infrastructure damage and uncertainty, has sent the price of hydrocarbons soaring, and therefore, oil derivatives such as gasoline have been the first elements to increase in price.

On the other hand, electricity has not suffered the increases it did in 2022, when a similar situation occurred following the Russian invasion of Ukraine. In this case, although Pedro Sánchez's government has also cut taxes on electricity bills, in Spain's case, there is the added factor that it has increased its energy production capacity with renewables.