Spain's tax cut of 20 cents per litre on petrol and diesel extends until end of year

This is the highest rate since February 2023 and marks the third consecutive month above 4%, double the level the ECB (European Central Bank) recommends, which has set a medium-term target of 2%.

The price of diesel has soared by 36% over the past year, while petrol has risen by more than 20% due to price increases resulting from the war in Iran. With the October figures now available, the government will extend the 20-cent per litre reduction on petrol and diesel in December, as year-on-year inflation for both fuels remains above the 15% threshold set to trigger the safeguard clause.

Despite this, fuels and lubricants for private vehicles drove prices down in October, in contrast to the rise seen in the same month of 2025. The relief in fuel prices comes following the entry into force of the government's anti-crisis shield, which provides a subsidy of 20 cents per litre for diesel and petrol. The price of petrol fell by 6.1% compared with September's figure, while diesel rose by 1.2%.

However, this trend was offset by gas, whose prices rose by 5.2% compared with the previous month, bringing the cumulative increase to 4.8% this year, as winter approaches.

Gas prices drove up inflation in the housing category, which stood at 7.6% year-on-year, 0.4% higher than in October 2025. This is despite the fact that Tur (the natural gas last resort tariff) is capped at 15% as part of the government's response to the war in Iran, a measure that will also remain in place until the end of the year.

Furthermore, package holidays had an impact, as their prices fell by less than in October 2025. They fell by 2.9% this year, compared with 3.6% in 2025, according to the INE. Conversely, food and clothing also helped to bring down the CPI, as their prices rose by less than in October last year.

The INE also confirmed the core inflation rate, which excludes changes in energy and fresh food prices, at 3.1%. This remains the highest figure since March 2024. The CPI rose by 0.6% month-on-month, that is, from September to October, which is 0.3% higher than last month.

With October's rise, monthly inflation has now risen for nine consecutive months, coinciding with the outbreak of war between the US and Iran. The conflict has triggered a global inflationary crisis due to rising energy prices, prompting national and international bodies to revise their forecasts upwards.

Think tank Funcas now expects inflation in Spain to remain at around 4.5% in the coming months. The Bank of Spain has also raised its projections and now puts the average inflation rate for 2026 at 3.9%, 0.3% higher than in its previous estimate.

The HICP (harmonised index of consumer prices), which is used for international comparisons, stood at an annual rate of 4.9%, 0.1% point lower than the previous month.

The monthly rise in the CPI was driven mainly by the clothing and footwear category, where prices rose by 7.9% due to the start of the autumn-winter season. Food prices also played a part, rising by 1.2%, driven in particular by higher prices of fruit and nuts and, to a lesser extent, of vegetables, pulses, potatoes, fish and seafood. Meanwhile, the housing category saw a monthly increase of 1.3%, driven by higher gas prices and, to a lesser extent, electricity, which rose by 1.8%.

According to INE data, the products that saw the sharpest price rises in October compared with the previous month were citrus fruit, which rose by 22.5%, and international air travel, which increased by 16.6%. By contrast, the biggest falls were recorded for petrol, the price of which fell by 6.1%, and for hotels, holiday flats and other accommodation, which became 5.8% cheaper.

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