July CPI Jumps to 10.8%, GDP Sees Upside Surprise

SPAIN JUL FLASH CPI -0.2% M/M (FCST -0.3%), +10.8% Y/Y (FCST 10.6%); JUN +10.2% Y/Y

SPAIN JUL FLASH HICP -0.5% M/M (FCST -0.8%), +10.8% Y/Y (FCST 10.5%); JUN +10.0% Y/Y

SPAIN Q2 2022 FLASH GDP +1.1% Q/Q (FCST +0.4% Q/Q); Q1 2022 +0.2% Q/Q

SPAIN Q2 2022 FLASH GDP +6.3% Y/Y (FCST +5.5% Y/Y); Q1 2022 +6.3% Y/Y

• Spanish inflation jumped to +10.8% y/y in the July flash release for both CPI and HICP headlines. This is 1984 high and a substantial 0.6pp and 0.8pp acceleration on June and 0.2-0.3pp above market expectations.
• Monthly contractions were softer than anticipated at -0.2% m/m (CPI) and -0.5% m/m (HICP).
• The key underlying drivers were again food and energy prices. A fall in fuel costs saw a more muted bounce in energy.
• Core inflation ex. food and energy expanded by a hot 0.6pp to 6.1% y/y, a fresh 1993 high.
• Spanish GDP saw a substantial boost in the Q2 flash print. GDP advanced by 1.1% q/q (vs +0.4% forecast), after nearly stalling at +0.2% q/q in Q1.
• The Spanish data follows a similar trajectory as French data earlier this morning: hotter inflation, and robust GDP, setting the stage for further ECB policy normalisation.