Summary

Over the last year, the rate of inflation has risen sharply in Spain. The consumer price index (CPI) has increased by 3.5%, compared to 2.2% a year ago; the GDP deflator has increased by almost 5%; and the underlying rate of inflation has risen by almost 3%. The inflation rate differential with regard to the eurozone comes to 1.4 points, compared to 0.5 points a year ago. This inflationary cancer reduces the competitiveness of Spanish industry and results in lower levels of growth and employment. The main cause of this excessive inflation is not the impact of the oil supply, but the Government’s own economic policy: a budgetary policy that is too expansive within the current monetary context of the eurozone, combined with a lack of structural reforms, which limit the growth potential of the Spanish economy.