OECD hikes Spain's 2026 inflation forecast to 3.7% as energy shock bites

In its latest economic outlook, the Paris-based international body left the door open to additional monetary tightening if energy price shocks triggered by the ongoing war in Iran persist and inflation fails to cool over the coming months.

Despite the inflation revision, the figure remains 0.3 percentage points below last August's peak, when Spain's Consumer Price Index (CPI) touched 4.3 per cent.

At the same time, the OECD raised Spain's Gross Domestic Product (GDP) growth forecast for 2026 by 0.4 percentage points to 2.6 per cent, citing robust domestic demand and greater-than-expected economic resilience.

However, the report highlights "considerable uncertainty" surrounding the medium-term outlook, particularly regarding volatile global energy markets. Without a lasting resolution to the crisis in the Middle East, persistent pressures on crude oil and natural gas supplies could force central banks into a more restrictive stance.

Energy price increases have intensified in recent months due to supply and export disruptions across Persian Gulf economies. High refining margins caused by processing bottlenecks are adding further upward pressure on consumer prices and operational business costs. The OECD also cautioned that summer droughts and extreme weather across Europe risk driving up food prices.

Despite global growth slowing during the first half of the year, the OECD noted that Spain and the UK demonstrated notable economic resilience, buoyed by solid domestic consumption, substantial oil reserves and investment in artificial intelligence technologies.

Headline inflation across G20 economies is projected to hit 4.1 per cent by the end of 2026 before easing to 3.6 per cent in 2027 as global energy costs moderate.

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