Stubborn inflation in Germany, Spain keeps ECB on data alert

Inflation slowed less than expected in Germany and quickened in Spain, offering European Central Bank officials a partial picture of the region's price pressures as they judge whether to raise interest rates again.

The numbers published Wednesday point to the possibility of a robust outcome when the eurozone report is released the following day data policymakers have highlighted as crucial to their September 14 decision.

Consumer prices in Germany, the region's biggest economy, rose 6.4% in August from a year earlier, exceeding the median estimate of 6.3% in a Bloomberg survey of economists. While inflation in Spain was far lower, at 2.4%, that result marked a second month of acceleration, and an underlying measure stayed far higher.


Any evidence of stubbornly strong consumer-price growth may yet convince the ECB to raise borrowing costs. Officials are weighing if underlying pressures are too strong to risk a pause, or whether a weakening economy can brake inflation without further tightening.

That appraisal augurs what appears for now to be a cliffhanger decision in two weeks' time. Hawks such as Austria's Robert Holzmann have already signaled they may push for a hike, while his Finnish colleague Tuomas Valimaki insisted on Tuesday that the outcome is “totally open.”