- Spain September final CPI +4.9% vs +4.9% y/y prelim
- Prior +4.3%
- Spain September final HICP +5.0% vs +5.0% y/y prelim
- Prior +4.6%
- Spain September core CPI +3.1% y/y
- Prior +2.9%
The final report confirms another uncomfortable rise in Spanish inflation in September, with headline annual inflation rising to 4.9% from 4.3% in August. The harmonised reading also jumps further to clip the 5% mark, the highest since February 2023.
The main culprit is of course the surge in energy prices, largely stemming from the Middle East conflict. But when looking at core prices, that is where the latest Spanish figures become a little more troubling.
Core annual inflation climbed to 3.1% in September from 2.9% previously. And that is the highest level since March 2024.
While the ECB can afford to look past temporary energy shocks, the concern is when those higher costs start filtering through to other goods and services. And with core prices starting to move up now, there are growing risks that the initial price shock is starting to feed into broader inflation pressures. In turn, that means making the eventual return to its 2% target a much more difficult task.
Now, this is just one report and it won’t be enough on its own to force the ECB into another rate hike. But with the ECB already having raised interest rates twice already this summer, the latest data certainly makes the argument for staying cautious a little stronger.
But if core prices continue to creep higher across Europe, the debate will soon shift from whether another rate hike is warranted to how much longer the ECB can afford to hold off on one.
This article was written by Justin Low at investinglive.com.