Spanish Inflation Jumps to Highest in Three Decades on Energy
Spanish inflation accelerated to the highest level in almost three decades, underscoring the continent’s intensifying struggle with soaring energy costs.
The rate jumped to 5.5% in October, based on a national measure, the highest since 1992. The so-called harmonized gauge also hit 5.5%, far exceeding the 4.6% median forecast of economists in a Bloomberg survey.
The number comes as warning to European Central Bank officials who meet in Frankfurt on Thursday. It’s also a foretaste for what’s to come from the rest of the region -- German, French, Italian and euro-area inflation readings are due by Friday.
Traders are ramping up bets that the ECB will raise borrowing costs by the end of next year.
But so far, President Christine Lagarde and her colleagues have insisted the current price jump is largely transitory, though Bank of Spain Governor Pablo Hernandez de Cos has sounded the alarm.
If the spike in inflation lasts too long it could slow the economic rebound from a sharp contraction last year, he said this week. He also announced that the central bank plans to substantially cut its growth forecasts for 2021 and to a lesser extent for 2022.
Spain is particularly vulnerable to energy shocks as it relies on gas imports to generate electricity and power links to other European nations are limited. To soften the blow of rising energy bills, the government has doubled funds earmarked for a social thermal energy bonus.
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