Spain's Inflation Surpasses ECB Target Amid Market Expectations for Rate Hike Due to Iran Conflict

Spain's inflation unexpectedly accelerated in April, surpassing the European Central Bank's (ECB) 2% target, bolstering market expectations for a rate hike this year due to the ongoing conflict in Iran. According to Jin10, data released on Wednesday showed that Spain's Consumer Price Index (CPI) rose by 3.5% in April, up from 3.4% in March, exceeding market forecasts. The increase was driven by rising fuel costs. Excluding energy and certain food items, the core inflation rate slightly decreased to 2.8%. The data was released as the ECB convened a two-day meeting, with analysts and investors anticipating that it will keep interest rates unchanged. Policymakers are still assessing the extent to which rising prices, such as gasoline, will affect other sectors of the economy. Spain is the first major economy in the Eurozone to release April inflation data, marking the second full month of the Middle East conflict. Germany is set to release its data later today, while the overall Eurozone figures will be published on Thursday, ahead of the ECB's rate decision announcement.