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Eurozone Inflation Jumps to 3.3% in August, Strengthening ECB Rate-Hike Expectations

Eurozone inflation accelerated sharply in August, increasing pressure on the European Central Bank as higher energy prices linked to the Iran conflict continue to feed into consumer prices.

Annual inflation rose to 3.3% from 2.9% in July, matching market expectations and moving further above the ECB’s 2% target. Energy was the main driver, with energy prices surging 14.3% year over year as crude oil and natural gas costs increased.

Underlying inflation offered a more encouraging signal. Core CPI, which excludes volatile food and energy components, eased to 2.4% from 2.5%, slightly below the 2.5% forecast. Services inflation also slowed to 3.0% from 3.3%, suggesting the energy shock has not yet developed into broad-based price pressure.

Meanwhile, the eurozone unemployment rate rose to 6.4% in July, compared with expectations for 6.3%, indicating some softening in the labor market.

The inflation figures strengthen expectations that the ECB will raise interest rates at its September 10 meeting. Markets are increasingly expecting a 25-basis-point increase in the deposit rate to 2.50%, which would represent the ECB’s second rate hike this year.

The overall picture remains complicated for policymakers: headline inflation is accelerating because of the energy shock while core inflation and labor-market data are showing less pressure. This supports another near-term ECB hike but could make policymakers more cautious about committing to an extended tightening cycle.
Spanish Inflation Accelerates Sharply in August

Spain’s annual consumer inflation accelerated to 4.3% in August, slightly above the 4.2% market forecast and sharply higher than the previous 3.6% reading.

The EU-harmonized HICP inflation rate also climbed significantly, reaching 4.5% from 3.9% previously, although it came in just below expectations of 4.6%.

The figures point to renewed and substantial inflation pressure in Spain. With headline inflation moving well above the European Central Bank’s 2% target, the data could reinforce concerns about persistent price pressures across the euro area and make further ECB monetary easing more difficult.
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Eurozone Manufacturing Accelerates as Services Remain in Expansion

Eurozone business activity remained positive in August, with manufacturing showing a notable improvement.

The HCOB Manufacturing PMI climbed to 52.8 from 51.9, beating the 51.8 forecast and signaling a stronger expansion in factory activity.

The Services PMI held at 51.7, slightly above expectations of 51.5 and remaining comfortably above the 50 expansion threshold.

Overall, the data point to resilient Eurozone activity, with the manufacturing recovery gaining momentum while services continue to expand at a steady pace.
Eurozone Inflation Rises to 2.9% in July, Core CPI Climbs to 2.5%

Eurozone inflation accelerated in July, with both headline and core consumer price growth moving higher from the previous month, keeping inflation pressures above the European Central Bank’s 2% target.

Annual CPI inflation came in at 2.9% in July, matching market expectations but rising from 2.8% previously. Core CPI, which excludes more volatile components and is closely watched for underlying price pressures, increased to 2.5% from 2.4%, also in line with forecasts.

On a monthly basis, consumer prices rose 0.2% after declining 0.1% in the previous month.
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Eurozone Investor Sentiment Rises More Than Expected in August

Eurozone investor confidence improved further in August, adding to signs that expectations for the region’s economic outlook are gradually strengthening.

The ZEW Economic Sentiment Index rose to 31.4 in August from 23.4 previously, comfortably beating market expectations of 25.9. A reading above zero indicates that more surveyed analysts expect economic conditions to improve rather than deteriorate over the coming six months.

The stronger Eurozone reading coincides with a notable improvement in Germany, where the ZEW Economic Sentiment Index climbed to 34.2 from 26.3 and also exceeded expectations.

The latest figures suggest financial-market participants are becoming increasingly optimistic about the European economic outlook. The European Commission’s broader sentiment indicators had already shown improvement in July, with economic sentiment strengthening in both the EU and Eurozone.

Overall, the August ZEW reading provides another positive forward-looking signal for the Eurozone economy. However, improving expectations will still need to translate into stronger underlying business activity for confidence in a sustained economic recovery to strengthen.
Eurozone Economy Expands 0.4% in Q2 as Growth Accelerates

The eurozone economy expanded by 0.4% quarter over quarter in the second quarter of 2026, matching market expectations and improving sharply from flat growth in the previous quarter.

On an annual basis, GDP increased 1.0%, also in line with expectations and accelerating from 0.5% growth in the first quarter.
Spain Outpaces Expectations While Germany Posts Modest Q2 Growth

Spain's economy grew 0.7% quarter-over-quarter in the second quarter, outperforming market expectations of 0.6% and accelerating from the previous quarter's 0.6% expansion. The stronger-than-expected reading highlights Spain's continued resilience, supported by solid domestic demand and services activity.

Meanwhile, Germany's economy expanded 0.2% in the second quarter, slightly above economists' expectations of 0.1%. However, growth slowed from the revised 0.3% increase recorded in the previous quarter, suggesting Europe's largest economy continues to recover at a gradual pace.
Eurozone Inflation Eases Further in June, Supporting ECB Policy Outlook

Eurozone inflation continued to moderate in June, reinforcing expectations that the European Central Bank will have greater flexibility to continue easing monetary policy if disinflation remains on track.

Headline consumer inflation came in at 2.8% year over year, matching market expectations and slowing from 3.2% in May. Core inflation, which excludes volatile food and energy prices, also met forecasts at 2.4%, down from 2.6% in the previous month.
Eurozone Inflation Cools More Than Expected in June

Inflation across the eurozone eased more than expected in June, reinforcing signs that price pressures continue to moderate and strengthening expectations for a more accommodative monetary policy outlook.

The annual Consumer Price Index (CPI) slowed to 2.8%, below economists' expectations of 3.0% and down from 3.2% in May.

Core inflation, which excludes volatile food and energy prices, also declined to 2.4% from 2.6% in the previous month, coming in below the consensus forecast of 2.5%.
Spain's Inflation Holds Steady in June, Keeping Price Pressures Elevated

Spain's inflation remained elevated in June, with the Consumer Price Index (CPI) holding steady at 3.2% year over year, matching both May's reading and market expectations. Meanwhile, the country's EU-harmonized inflation rate (HICP) came in at 3.6%, unchanged from the previous month.
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