MADRID (Reuters) - Spain's European Union-harmonised annual inflation rate accelerated to 3.5% in January, the highest level among large eurozone economies, as its growth remains solid, while its neighbours are slowing down.
The figure released by the National Statistics Institute (INE) on Thursday confirmed its flash estimate, marking an increase from 3.3% registered a month earlier and was in line with the average estimate of analysts polled by Reuters.
It compares with 3.4% in France, 3.1% in Germany and 0.9% in Italy.
"Today's figure shows the difficulty of reducing price growth in the services sector, especially in an environment where wages and employment continue to rise," said Miguel Cardoso, chief economist for Spain at BBVA (BME:BBVA) Research.
The average rate in the euro zone's 20 countries slipped to 2.8% in January from 2.9% in December. Inflation is cooling quickly in the bloc as growth is anaemic and lending growth is at best bottoming out after an exceptionally weak 2023.
Unlike its neighbours, though, the Spanish economy grew by a solid 2.5% last year, while Italy and France's grew by less than 1% and Germany's contracted by 0.3%.
The pickup in Spain's inflation was mainly due to a rise in electricity and gas prices, which respectively gained 9.4% and 7%. The Spanish government in January ended a reduction on value-added tax on utility bills approved two years earlier.
Food prices rose 7.4%, though clothing and footwear prices fell more than 10% in January.
Still, core inflation, which strips out volatile fresh food and energy prices, dropped to 3.6% in the same period from 3.8% in December, its lowest since March 2022.
Bank of Spain Governor Pablo Hernandez de Cos singled out the decline in core inflation, which was in line with the euro zone trend, as "good news", and "a slightly lower inflation than what we were forecasting in December".
Spain's national consumer prices rose 3.4% in the 12 months through January from 3.1% in the period through December.