Spain's Inflation Eases to 4.5%, but Remains Above Target

Spain's inflation rate eased to 4.5% in August, down from July's 4.6%, according to data released by the National Statistics Institute (INE). The reading marks a slight cooling off, but remains above the European Central Bank's (ECB) target of 2%. Energy costs drove the increase, rising 5.2% year-on-year, while food prices rose 4.1%.

The core inflation rate, excluding energy and fresh food, stayed sticky at 4.3%, indicating persistent underlying price pressures. Services inflation, a key component watched by the ECB, remained elevated at 4.8%, reflecting robust domestic demand and wage growth.

The data comes ahead of the ECB's September policy meeting, where policymakers are expected to hold interest rates steady after a series of hikes. Spain's inflation rate is among the highest in the euro area, alongside Germany and France, complicating the ECB's one-size-fits-all approach.