Spanish families have faced a significant rise in expenses due to the ongoing conflict between the US, Israel, and Iran. Fuel, electricity, and basic food prices have already increased, directly impacting the standard of living and economic stability in the country. Experts warn that if the situation drags on, the consequences for Spain’s economy could become even more severe.
Fuel and energy
The first noticeable blow was a jump in petrol and diesel prices. According to Funcas, in a short period, the cost of a full tank for an average car rose by about 20 euros, and annual fuel expenses increased by 225 euros per family. If tensions in the oil market persist, the price per liter could approach 2 euros, with additional fuel costs reaching 400 euros a year. Electricity and gas in Spain are rising less sharply so far than in other European countries, but the European Central Bank is already considering scenarios in which gas prices could exceed 100 euros per megawatt-hour.
The Spanish government has temporarily reduced VAT on fuel and energy carriers from 21% to 10% until the end of June, and maintained tax breaks on electricity and gas. However, these measures require approval from Congress, and if they are revoked, household expenses will rise even further. Prime Minister Pedro Sánchez has announced plans to accelerate the development of renewable energy in order to reduce dependence on external supplies and mitigate the effects of the energy crisis.
Grocery prices and inflation
Rising energy prices have quickly affected transportation and agricultural production costs. This has led to an increase in food prices, especially for fruits and vegetables, which rose by nearly 6% in March. According to OCU, the average cost of a shopping basket reached a record €320.78 per month. Many families have yet to recover their purchasing power from previous inflation waves, and the new surge in prices is only making matters worse.
Macroeconomic forecasts are also worsening. Funcas estimates that inflation in March could reach 3.6% and may exceed 4% in the coming months. If the energy crisis persists, the average annual inflation rate will remain above expectations. The Chamber of Commerce of Spain has revised its 2026 GDP growth forecast: in the event of a prolonged conflict, economic growth could slow by 0.3% and inflation could rise by another half percent. BBVA Research analysts also note that uncertainty in global markets has increased, and much will depend on how long the war lasts.
Domestic demand and support
Falling real income leads to a reduction in domestic demand. When fuel, electricity, and food become more expensive, families have less left for other expenses. This affects businesses and overall economic growth. To soften the impact, the authorities have introduced an anti-crisis package with tax breaks and support for the most vulnerable sectors. However, the effectiveness of these measures depends on approval in parliament and how the situation develops in the Middle East.
The housing market is reacting less sharply for now, but if inflation persists, the expected reduction in mortgage rates may not happen. This would lead to more expensive loans and reduced demand for real estate. Experts believe that a noticeable drop in housing prices is only possible during a prolonged crisis, and in the near future, rising construction material costs may even push prices for new apartments higher.
Context and related developments
In recent years, Spain has already faced waves of inflation triggered by external shocks such as the pandemic and the 2022 energy crisis. At that time, rising gas and oil prices also made goods and services more expensive, prompting the government to introduce temporary support measures. Similar scenarios played out in other European countries, where dependence on energy imports made economies vulnerable to international conflicts. Now, the situation is repeating, but the scale and pace of change are even greater, demanding new solutions and rapid adaptation.
