EUROPEAN INFLATION: Spain Core CPI Below Expectations

Spanish February preliminary HICP came in in line with expectations on the yearly rate at +2.9% Y/Y (vs +2.9% cons and prior) and the sequential reading at 0.4% M/M (0.4% cons; -0.1% prior). Core HICP was also 2.1% (2.4% prior). This was the lowest core HICP since December 2021.

• The national CPI also came in as expected at +3.0% Y/Y (vs 3.0% cons; 2.9% prior) and 0.4% M/M (vs 0.4% cons; 0.2% prior). Core CPI came in below expectations, at +2.1% Y/Y (vs 2.3% cons; 2.4% prior).
• Headline CPI was driven upwards by higher electricity prices, INE comments. Car fuel had a downward contribution vs January, meanwhile.
• Ahead of the release, analysts generally had expected strong base effects in both goods and services behind a deceleration in Spanish core pressures. On the goods side, Goldman Sachs highlighted drags from clothing and footwear. On services, Barclays expected transport services to be relatively flat on a sequential basis, after a soft January due to discounts on railway prices and airfares, Goldman also expected limited payback in the rail transport component.
• Overall, there is little colour in the press release, so for full detail, especially on services prices, we will have to await the final data. However, the core deceleration can be interpreted as a good sign for the respective Eurozone figure to be released Monday.
• For context, Spain represents 12% of the Eurozone HICP basket in 2025.