France, Spain inflation jumps in August on energy costs

Consumer prices in France and Spain surged in August, with both eurozone economies reporting sharper-than-expected inflation driven by rising energy costs, adding pressure on the European Central Bank ahead of its September rate decision.

Preliminary Data Shows Broad Acceleration

France's harmonized inflation rate climbed to 2.7% year-on-year in August, up from 2.4% in July, according to preliminary data from statistics agency INSEE released Friday. The national CPI measure rose to 2.4%, the highest reading since May, from 2.1% the prior month. Energy inflation jumped to 16.7% from 12.6% in July, with petroleum products the primary driver. On a monthly basis, consumer prices rose 0.7%.reuters+1

In Spain, the estimated annual CPI inflation rate reached 4.3% in August, up from 3.6% in July and above market expectations of 4.2%, according to flash data from the National Statistics Institute (INE). The acceleration was the highest reading since February 2023, shaped by price hikes in fuels and lubricants for personal vehicles. Food and non-alcoholic beverages also contributed, though detailed breakdowns will not be published until September 15.thecorner+2

ECB Rate Decision Looms

The data strengthens expectations that the ECB will raise interest rates by 25 basis points at its September 10 meeting. ECB Governing Council member Martins Kazaks said Friday that "inflation mustn't be allowed to take root," adding that rate increases are one way to prevent elevated price pressures from becoming entrenched.bloomberg+1

Eurozone annual inflation had already risen to 2.9% in July, up from 2% a year earlier, with energy costs linked to the Middle East conflict that began in late February driving much of the increase. The Wall Street Journal News Corp ↘ 2.36% reported that the French figure matched economists' expectations, while Spain's overshoot adds urgency to the ECB's deliberations.turkiyetoday+1

Energy Shock Complicates Outlook

The inflation acceleration in both countries reflects the broader impact of the Middle East war on global energy markets. Spain's inflation had already climbed steadily through 2026, rising from 2.3% in January to 3.6% in July, before the latest jump. In France, services inflation offered a partial offset, slowing to 2.0% from 2.2%, but this was overwhelmed by the energy component.tradingview+2

Markets are now pricing in a 63% probability that the U.S. Federal Reserve holds rates unchanged next month, while expectations for one Fed rate hike by year-end remain firm.turkiyetoday