(Bloomberg) -- The Bank of Spain said inflation will be faster than it had anticipated this year and next due to a pickup in oil prices that will also drag down economic expansion.

The acceleration in consumer-price growth, which is currently among the slowest in the 20-nation euro zone, will come even after the European Central Bank raised interest rates for a 10th consecutive time last week. It will also be driven by less favorable base effects and reduced fiscal support for households, the central bank said.

Costlier oil, alongside the ECB’s unprecedented monetary tightening, will weigh on output, meanwhile — doing nothing to quash talk of stagflation.

  • Inflation is seen quickening to 3.6% in 2023 versus 3.2% earlier, and 4.3% in 2024 versus 3.6% earlier, quarterly macroeconomic projections show
  • Price gains are seen at 1.8% in 2025, unchanged and below the ECB’s 2% target
  • Gross domestic product is expected to rise 2.3% in 2023, unchanged from previous outlook, 1.8% in 2024 versus 2.2% earlier, and 2% in 2025, down from 2.1% earlier

The new projections don’t incorporate this week’s sharp upward revisions by the national statistics institute to GDP readings for 2021 and 2022. 

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