EUROPEAN INFLATION: August Spain Inflation Lower Than Expected But Core Sticky

Spanish preliminary August HICP came in lower than expected on the yearly rate at +2.4% Y/Y (vs +2.5% cons; +2.9% prior) and the sequential reading at 0.0% M/M (0.2% cons; -0.7% prior). The national CPI also came in below expectations at +2.2% Y/Y (vs 2.4% cons; 2.8% prior) and 0.0% M/M (vs 0.2% cons; -0.5% prior).

• Core CPI came in above expectations, however, at +2.7% Y/Y (vs 2.6% cons; 2.8% prior).
• The headline rate was driven lower by fuel prices (partially due to base effects), the statistics office added. Additionally, "although to a lesser extent", by the fall in food and non-alcoholic beverage prices.
• Ahead of the release, analysts had flagged a rise in the high frequency electricity tariff. As the headline rate was estimated to fall quicker than the core rate (which excludes energy prices, among others), this tariff rise likely was not expected to move the needle too much already to start with.
• Overall, there is little colour in the press release, so for full detail, we will have to await the final data. This is especially the case for services inflation, which remains under elevated scrutiny - but core coming in above expectations points to some continued stickiness here.
• For context, Spain represents 11% of the Eurozone HICP basket in 2024.