Spain’s March final Consumer Price Index (CPI) stands at +2.3%, consistent with the year-over-year preliminary data. Previous inflation rates were recorded at +3.0%.
The Harmonised Index of Consumer Prices (HICP) is +2.2%, matching the year-over-year preliminary figure, while the prior reading was +2.9%.
Core Annual Inflation Trends
Core annual inflation has dropped to 2.0%, down from 2.2% in February, providing an encouraging indicator for the European Central Bank (ECB).
As this data does not account for upcoming tariffs, future developments are anticipated to be important.
Currently, expectations remain unchanged regarding a 25 basis point rate cut next week.
The figures released confirm a steady moderation in consumer prices across Spain. The headline CPI holding at 2.3% on a yearly basis, unchanged from the earlier projection, signals that inflationary pressures may be easing more predictably. Compared to the previous 3.0% rate, this movement aligns with the recent eurozone-wide disinflation trend that we’ve been closely tracking.
The HICP, which is adjusted to reflect EU standards and provides a more comparable gauge across member states, also aligns with earlier projections at 2.2%. Again, this is a decline from 2.9% the month before and indicates a measurable softening in price growth, particularly on goods and services that often exhibit longer-term inflation inertia.
Policy and Market Reactions
More noteworthy still is the drop in core inflation—the measure that leaves out energy and food due to their volatility. It’s now at 2.0% compared to 2.2% in February. This metric is especially helpful because it strips out elements that could lead us astray when it comes to broader inflation trends. For policymakers, especially at the ECB, this level of core price stability suggests they won’t need as aggressive a stance as before. And while inflation is still above target, the rate of descent has become harder to ignore.
That said, we know from experience that trade measures and policy announcements can wash through markets quickly. These latest figures do not factor in the tariff changes on the horizon. There’s every chance they could influence input costs or supply chain pricing over the next few months.
As for expectations around interest rates, the broad consensus had already built in a 25 basis point cut at the next ECB meeting. These inflation prints don’t challenge that view. On the contrary, they give more reasons to go ahead with it. From our standpoint, pricing in rate direction has become more sensitive to underlying data rather than sentiment.
Barroso and colleagues at the ECB are unlikely to deviate from their current trajectory given these more subdued inflation levels. Market reaction around rates might be well-contained in the short term, and the pricing of risk premium in euro-linked derivatives could also stay near current levels, unless surprises build later from trade or energy.
From here, it becomes increasingly relevant to monitor components such as base effects in energy and services over the quarter ahead. For us, it’s not only about inflation prints, but how expectations shift on the back of these facts. Attention will likely drift more towards forward-looking indicators and wage growth, particularly in the services sector, which still runs warm in some southern regions.
We’d suggest keeping a close eye on volatility measures, especially if positioning starts to crowd ahead of the ECB meeting. Better to spot the shift early, rather than scramble after forwards reprice. Adjustments, if they come, will likely hinge not just on the numbers, but also the firmness behind recent ECB guidance and how much follow-through we get in April’s inflation snapshots.
In short, the signals are there—just not all in one direction. Keeping options tight seems premature. Let’s stay agile.
