September CPI for Spain comes in hotter than expected at 4.9%

• Spain's preliminary September CPI climbed 4.9% y/y, versus the 4.6% that had been expected.
• The prior reading was +4.3%.
• Spain's preliminary HICP for September rose 5.0% y/y, against a forecast of 4.9%.
• That stood above the previous +4.6%.

Looking at the breakdown, the figures came in above expectations, with headline annual inflation accelerating to 4.9%, the highest since February 2023.

At the same time, core annual inflation is projected to pick up as well, moving from 2.9% to 3.1% in September. That points to price pressures broadening beyond energy alone. It also represents the strongest core annual inflation reading since March 2024.

A single reading may not be conclusive, but should Spain's trend spread across the euro area, it could bolster the case for a swifter ECB action at its upcoming meeting.

Currently, markets assign about a 50% probability to a 25 basis point rate increase in October. Inflation figures due from the region this week could shift those odds.

EUR/USD is little moved on the session, trading around 1.1360.

The reports cover different measures: CPI monitors consumer prices in Spain, while HICP applies a harmonised method to allow cross-country comparison across the euro area.

This matters because Spain is among the first large euro area economies to publish September inflation, giving an early indication of the direction for the wider Eurozone CPI.

In context, headline inflation has moved up rapidly, from 3.6% in July to 4.3% in August, and a further gain was anticipated for September. Core inflation, however, softened to 2.9% in August, indicating that the recent jump has been driven mainly by energy costs rather than a widespread rise beneath the surface.

Energy costs continue to be the principal wildcard for euro area inflation. The ECB is attempting to separate a transient energy shock from indications that the increases are embedding themselves more durably in wages, services and underlying inflation.