Bank of Spain raises 2026 inflation forecast to 3.9%

Bank of Spain revealed in its report on Friday that it expects average inflation to stand at 3.9% in 2026 and 3.7% in 2027, an increase of 0.3 and 1.1 percentage points, respectively, compared to its July forecast. It pointed to energy prices, up 22% year-on-year in September, as the main inflation driver, while noting that energy inflation would be almost 10 percentage points higher without the government's support measures.

The central bank forecast the Spanish economy will grow by 2.6% in 2026 and 2.2% in 2027, revising its July estimates up by 0.3 and 0.5 percentage points, respectively. It said the economy has shown "remarkable resilience" despite the energy shock, including strong domestic demand, particularly private consumption and investment. The bank stated that private consumption will remain the main driver of economic activity, although its growth rate is expected to moderate in the coming quarters.