FRANKFURT--German consumer-price growth stabilized at a very low rate in August, putting added pressure on the European Central Bank to take more dramatic steps to prevent ultra-low inflation from gripping the euro zone and further damaging the bloc's stagnant economy.

The Federal Statistics Office said the annual rate of inflation in Europe's largest economy, measured according to a common European Union method, was 0.8% in August, unchanged from July's reading. Prices were flat compared to last month.

The August reading was driven by a sharp decline in energy prices, which were offset by a slight rise in food inflation and an increase in services prices.

Euro-zone inflation figures for August, due Friday, are expected by many economists to weaken to 0.3%, on an annual basis, from 0.4%. That is far below the ECB's target of just under 2% over the medium term.

Low German inflation makes it harder for struggling economies in southern Europe to rebalance their economies. In order for Spain, Portugal and others to become more competitive, they need to have inflation rates below that of Germany.

If Germany's inflation rate were 2% or higher, they could do this with lower, but positive, rates of inflation. With German consumer prices growing so slowly, however, countries in southern Europe must run super-low, or even negative, rates of inflation to restore competitiveness. That raises the risk of a deflationary spiral that threatens consumer and business spending while making it harder for companies and governments to service debts.

While German inflation hovers under 1%, Spain's rate has turned negative, a trend that intensified in August. Consumer prices shrank 0.5% from last year, the country's statistics office said, compared to a 0.3% drop in July. Deflationary forces are starting to threaten healthier economies in northern Europe, too. Belgium reported Thursday that its inflation rate plunged to 0.02%, a nearly five-year low.

In a speech Friday, ECB President Mario Draghi warned that low inflation may be gaining a foothold in Europe because financial markets are reducing their expectations for future consumer-price growth. "Over the month of August financial markets have indicated that inflation expectations exhibited significant declines at all horizons."

The ECB "will acknowledge these developments and within its mandate will use all the available instruments needed to ensure price stability over the medium term," he said. The ECB meets next on Sept. 4.

Mr. Draghi's emphasis on inflation expectations--which are central to the medium-term price outlook--opened the door wider to large-scale purchases of public and private debt by the ECB, known as quantitative easing, analysts said. Equity markets have rallied this week on these hopes and bond yields have fallen. The euro has weakened on expectations of more ECB stimulus.

Still, many economists expect the ECB to wait and see how other stimulus measures pan out before embarking on quantitative easing, which is deeply unpopular in Germany. In June, the ECB reduced rates to record lows and unveiled a four-year lending program for banks. The first installment will be next month.

Economists at Nomura and J.P. Morgan Chase expect the ECB to lower their key interest rates further at next week's meeting.

Christopher Bjork also contributed to this article.

Write to Emese Bartha at emese.bartha@wsj.com

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