Spain’s inflation in September exceeded expectations, rising to 5%, reinforcing expectations for further rate hikes by the European Central Bank.

(1) Spain's inflation rate has accelerated beyond expectations and further exceeded the European Central Bank's 2% target level, strengthening market expectations for continued interest rate hikes. (2) Data shows that Spain's consumer prices rose by 5% year-on-year in September, higher than August's 4.6%, reaching the highest level since February 2023 and also above the economists' median forecast of 4.9%. (3) The Spanish statistical agency stated that rising fuel prices and the cost of travel packages were the main factors driving the sharp rise in inflation. Meanwhile, the core indicator measuring underlying price pressures also increased more than expected. (4) Europe is facing the impact of energy costs rising again due to the Iran war; however, the region's economy has so far performed better than expected. (5) Spain is the first major eurozone member to release inflation data this month, and other countries are also expected to announce higher inflation figures.