Spain December Inflation Slows to 3.0%: Core Prices Remain Sticky

Spain’s inflation profile for December 2026 continues to signal a gradual disinflationary trend, with headline EU-harmonised inflation easing to 3.0%. While lower energy costs provided much-needed relief to the headline figure, a stubborn core reading underscores the challenges facing the European Central Bank (ECB) as domestic price pressures remain firmly rooted.

Spain’s Inflation Prints: The December Breakdown

The latest data from Spain reflects a complex internal dynamic where volatile components are cooling, but essential services and goods are holding their ground. The headline figures show a clear moderation, yet the details require a more cautious interpretation from a policy perspective.

• EU-Harmonized Inflation: Fell to 3.0% y/y, down from 3.2% in November.
• National CPI: Eased to 2.9% y/y from the previous 3.0% print.
• Core Inflation: Remained unchanged at 2.6% y/y, highlighting persistent underlying demand.
• Food & Non-Alcoholic Beverages: Rose to 3.0%, a 0.2 percentage point increase from the prior month.

Drivers of Disinflation: Fuel vs. Food

The primary driver for the headline deceleration was the energy sector, specifically lower fuel prices. However, fuel-driven disinflation is notoriously volatile and prone to rapid reversals based on geopolitical and supply-chain shifts. Conversely, the uptick in food inflation serves as a stark reminder that the path toward the target is rarely linear.

For traders, the stability of core inflation at 2.6% is the more significant signal. It suggests that despite the slowing headline rate, domestic price pressure is not worsening, but it isn't dissipating quickly either. This creates a "sticky" environment that may prevent aggressive dovish shifts in the near term.

Transmission Mapping and Market Impact

In the current macro environment, the fastest channel from inflation data into asset prices is the front-end rates complex. Because the core inflation rate remains unchanged, it challenges the narrative of imminent, aggressive easing. Typically, front-end yields move first in response to such prints, with the Euro (EUR) and equity indices like the IBEX 35 responding with a lag.

When activity data improves but pricing only cools gradually, markets often treat the result as a 'soft landing' confirmation. However, the ECB remains sensitive to services inflation and wage growth proxies, which will be the next key indicators to watch for any divergence from broader Eurozone aggregates.

Strategic Outlook for 2026

The practical takeaway for risk management is to treat initial market reactions as information rather than absolute truth. High-quality trading opportunities often emerge after the first impulse—when the market re-prices its expectations and luego mean-reverts to levels that align with the broader long-term trend. As highlighted in our Eurozone Flash PMI analysis, price pressures across the continent are firming even as growth floors, creating a tug-of-war for the common currency.

Key Factors to Watch Next

1. Core Divergence: How Spain's core trend moves relative to the wider Euro-area aggregates.
2. Energy Volatility: Whether oil and gas prices stay low enough to keep headline figures within the 2%–3% range.
3. Wage Growth: Proxies for internal services inflation which could keep the ECB cautious.

Related Reading: France Flash PMI Analysis and Germany Growth Trends.