First of all, Spain, per se, had not ever been industrialized OUTSIDE of the Jewish community. Analysts argue, and I think successfully, that the Jews of Spain became the world's first true industrial class. A quick review of classical Ladino surnames demonstrates the case very well ~ they are all about making stuff, assembling products, doing chemistry.
When Spain expelled the top end mercantile class among the Jews (about 1/3 of the Jewish population with most of the rest having been forcibly assimilated ~ see Moreno) that didn't hurt Jewish industrial production at all but it wiped out the marketing arm of domestic industry.
That right there had to raise prices sky high.
That's when the Morenos find it advisable to LEAVE SPAIN, which they did. The Americas were popular, as was the former Spanish Nederlands (now Northern Belgium), Germany, Italy and so on.
With the loss of manufacturing previously inflated prices rose even more, and that's all before silver mining operations had really gotten underway in the Americas ~ sure, they had the Peruvian gold, but the larger part of it was mined later ~ after 1541 Fur Shur. They still mined Peruvian gold of course. Probably most of it is still in place and will be for centuries.
Later, under the reign of Charles and then Philip II (who ruled Spain from the Nederlands) somebody got the idea of expelling the Morescos ~ converted Moslems, and a good number of Morenos, about whom folks had doubts as to their loyalty to Christianity. They were expelled to North Africa for the most part.
There went the REPLACEMENT commercial class for the Jewish mercantile class expelled under Isabella and Ferdinand, and the newer acolytes of the still extant Jewish industrial class now identified mostly as Morenos.
Inflation went out of sight with that transformation, and then finally, the peasantery in a good chunk of Spain left for the Americas leaving behind the extraction of basic materials (wood, cement, minerals, cattle, pigs) ~ and that wasn't picked up for a couple of centuries as Spain spiraled deeper into a more primitive state.
Everything worth having had to be imported since nobody made it anymore, but at the same time no one was very good at importing, or distributing or selling, so the prices climbed higher and higher.
I think by the time the Spanish began using their gold and silver reserves to purchase goods abroad, they'd already regressed the country to a pre-Roman economic level.
You amaze me with what you know about history. What is your background?
In 1500 Spain had a quite vibrant economy, with prospering mercantile, financial, agricultural and industrial sectors, certainly as compared to France or England of the time.
For a host of reasons these sectors all declined, not only as compared to competitors, but even absolutely, particularly after the mid-1600s.
There are literally dozens of reasons, so trying to nail down A or B as “the cause” is pretty much a waste of time.
Possibly the most important single cause would be the 80 Years War Spain engaged in to try to crush Protestantism and independence in the Netherlands, not to mention intermittently trying to enforce absolutism and absolutism throughout Europe (Armada, 30 Years War, etc.).
10 years of war in Iraq and Afghanistan has been a strain on our economy. The Spanish wars were at least an order of magnitude more difficult for its economy to handle and were pretty nearly continuous for a century.