By Emese Bartha And Brian Blackstone 

FRANKFURT--German inflation stabilized at a very low rate in August while Spanish consumer prices fell at an accelerated pace, putting added pressure on the European Central Bank to take dramatic steps to prevent ultralow inflation from further damaging the euro zone's stagnant economy.

The national reports, including one from Belgium showing flat prices, came one day ahead of euro-zone-wide figures, due Friday. Thursday's figures suggested annual euro-zone inflation will weaken from 0.4% in July to 0.3% in August, a fresh five-year low and well below the ECB's target of just below 2%.

Separate reports showing a drop in business and consumer confidence in the euro zone--as well as a slight uptick in German unemployment--underscored the fragility of the world's second-largest economic region and signaled that after stalling in the second quarter, the economy will struggle to expand much this quarter.

Germany's statistics office said annual inflation in Europe's largest economy was 0.8% in August, unchanged from July's reading. Prices were flat compared with 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.

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 superlow, 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.

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 with 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 softened to 0.02%, a nearly five-year low.

The reports came days after 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. 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.

Separate reports Thursday suggest the euro-zone economy needs the boost after stalling last quarter. The European Commission's economic sentiment index, which covers companies and consumers, fell to 100.6 in August from 102.1 a month earlier. A separate index measure consumers' inflation expectations weakened too, mirroring trends in financial market gauges.

German unemployment unexpectedly rose in August. But the increase was small and the unemployment rate remained near record lows.

Christopher Bjork contributed to this article.

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