In Spain, the inflation rate has continued to decline, settling at 1.9% year-on-year in May, a reduction of three-tenths from the previous month, marking the lowest level in seven months according to preliminary data from the National Statistics Institute. This figure aligns with analysts' expectations amidst specific energy tensions stemming from an electric blackout on April 28, which led to a temporary increase in electricity prices in the days following. Despite this, the overall impact on the general index has been limited due to a sustained trend of energy price reduction over recent months.

The underlying inflation, which excludes the more volatile fresh food and energy, has also slightly moderated, reaching 2.1%

The blackout demanded intensive activation of adjustment services in the wholesale market and increased use of more expensive fossil technologies to ensure supply. Consequently, the regulated market electricity bill saw an average increase of about four euros per month, according to the National Commission on Markets and Competition. Nevertheless, this temporary spike wasn't enough to reverse the declining trajectory of electric bills since late 2023, partly due to a more favorable international context with retreating oil prices and a normalization of natural gas prices after the tensions caused by Russia's invasion of Ukraine.

In May, despite the brief rise in electricity costs, the energy component as a whole continued to drive inflation down. This is one of the key reasons behind the reduction in the general index, as noted by BBVA Research analysts. Raymond Torres, director of economic affairs at Funcas, highlights that "energy prices have moderated even more than anticipated," suggesting a monthly decline that could exceed 1%. In his view, the blackout's impact has been offset by favorable developments in other areas of the energy sector, resulting in a limited effect.

Government sources explain, "The Spanish economy demonstrates a remarkable ability to achieve a continuous reduction in inflation while maintaining one of the highest growth rates among developed countries, particularly relevant in the current context of high international uncertainty."

While underlying inflation has eased compared to the previous month, it remains higher than the general index, a phenomenon explained by persistent upward pressure on service prices. This component, closely tied to labor costs, reflects the delayed effect of wage increases that have been established in recent months' collective agreements. Torres notes, "Service prices continue to rise well above 3%, partly due to strong tourist demand and partly due to the effect of new agreed wages." This inertia in the more rigid core of prices prevents a more rapid moderation of this rate, traditionally allowing for a long-term view of price trends and the effectiveness of monetary policy.

The May data marks the third consecutive month of declines. After starting 2025 with rates close to 3%, inflation began to lose momentum in March, reaching the 2% symbolic goal set by the European Central Bank. The contrast with the same period last year is significant. In May 2024, inflation had risen for the third consecutive month, reaching 3.6%, driven by an unexpected increase in food prices and persistent pressure from fuels.

The current situation is different: the energy component no longer acts as an inflationary catalyst and, although services remain a source of pressure, their impact is cushioned by stability in other goods. With food prices stabilized after the peaks of 2022 and 2023 (last month the rate fell by four-tenths, reaching 2%), analysts see room for inflation to stay within the target set by the ECB. The challenge remains in the underlying rate, especially in services, which condition a scenario where "contradictory trends coexist," according to Torres.