Inflation Firmer Than Expected; Electricity Drives Disinflation

Spanish preliminary February HICP came in slightly firmer-than-expected at +2.9% Y/Y (vs +2.8% cons and 3.5% prior), with the sequential reading a more sizeable upside miss at 0.4% M/M (vs +0.2% cons and -0.2% prior). The national CPI measure data came in line at 2.8% Y/Y (vs +2.8% cons; +3.4% prior) and 0.3% M/M (vs +0.4% cons; +0.1% prior).

• Core inflation also slightly exceeded expectations, printing at +3.4% Y/Y (vs 3.3% cons and 3.6% prior). For the core rate, this represents the 8th consecutive decline and the lowest value since March 2022.
• The headline rate was strongly driven downward by electricity prices according to INE, in line with analyst expectations. Fuel prices increased, however.
• INE did not comment on food inflation, which analysts also expected to decrease.
• The slight upside surprise on core CPI in particular may marginally bias upward expectations for Friday's Eurozone-wide inflation prints, but the lack of detail in the report (particularly on services) makes it difficult to draw any firm conclusions other than that there was no disinflationary surprise this month.
• For context, Spain represents 11% of the Eurozone HICP basket in 2024.

MNI, INE