The Recent Performance of Underlying Inflation in the Euro Area and in Spain

Since mid-2021, inflationary pressures have intensified and have spread to various components of underlying inflation, both in the euro area and in Spain. This largely reflects the indirect effect of the sustained increase in production costs triggered by commodity market tensions. Moreover, other pandemic-related factors may have facilitated the pass-through of inflationary pressures: production bottlenecks, the increase in home renovation demand and, more recently, the rapid pace of resumption of activities involving more social contact, after two years of demand constraints. Underlying inflation components related to transport, household equipment and maintenance, and recreation, hospitality and tourism have seen particularly high price rises over the last year, both in the euro area and in Spain. Recreation, hospitality and tourism made a significantly higher contribution to the growth in consumer prices in Spain than in the euro area in the last year, owing to the higher price rises in these components and their greater weight in the consumption basket